I posted earlier on the data from New Zealand showing not quite as bad economic contraction as expected.
But, still contraction:
New Zealand Q2 GDP -0.2% q/q (expected -0.4%)
Responses:
What’s coming up from the Reserve Bank of New Zealand after the weak NZ GDP dataNew Zealand GDP data showed a contraction, not as bad as expected – recap
This now via analysts at KiwiBank, pulling no punches in this forthright note. Good stuff.
In brief:
New Zealand remains in a prolonged recession.
Forward-looking indicators suggest that the September quarter will record another contraction. That makes the recession two years old. Policy settings are restrictive, but more interest rate cuts are coming. High interest rates have hurt, and the economy demands more easing.
More specifically for the RBNZ:
the RBNZ are responding – late, but in earnestA rate cut in October is as close to a done deal as you get. In fact, we’d argue the only discussion should be on delivering 25 or 50. We’d advocate 50. And again, 50 in November. The RBNZ’s first 25bp cut in August marked the start of a move towards 2.5-to-3%. That’s at least 250-to-300bps. We argue the RBNZ needs to get the cash rate below 4%, asap. It takes up to 18 months for rate cuts to filter through the economy. Get moving…
This article was written by Eamonn Sheridan at www.forexlive.com.
