The New Zealand Institute of Economic Research (NZIER) runs a ‘shadow board’ of analysts. The Shadow Board is independent of the RBNZ and does not represent what the RBNZ is going to do but rather what their view is that the RBNZ should do. That is, the Shadows do not preview what they think will happen, but what they think should happen:
- recommends the Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by another 50 basis points to 3.75%
Citing:
- annual inflation contained within the RBNZ’s 1 to 3 percent inflation target band
- economic activity and the labour market remaining soft
- Regarding where the OCR should be in a year’s time, the majority of Shadow Board members picked an OCR ranging between 2.75 percent and 3.5 percent. This reflects the Shadow Board’s broad view that the RBNZ should take a more cautious approach to the pace of OCR cuts over the coming year. In particular, several Shadow Board members had pointed out their concerns over the potential inflationary impacts of the US fiscal and trade policies and a lower New Zealand dollar. However, two members viewed that the central bank should reduce the OCR at a more rapid pace given the weak conditions in the New Zealand economy.
More here.
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Earlier:
- Reserve Bank of New Zealand (RBNZ) expected to cut reduce interest rates by 50bp on Feb 19
- Reserve Bank of New Zealand preview – likely the final 50bp interest rate cut
The Reserve Bank of New Zealand (RBNZ) meeting is on February 19. The statement is due at 2pm NZ time:
- 0100 GMT
- 2000 US Eastern time
This article was written by Eamonn Sheridan at www.forexlive.com.
