BNZ preview the Reserve Bank of New Zealand meeting on November 27, saying that arguments for a 25, 50, or 75bp all have merits. Analysts at BNZ, though, say that a 50-point cut this meeting is their central view.
Citing:
economic spare capacity continues to
grow and will do so for some time
inflation will remain well contained around the 2.0% mark
and the unemployment rate will rise further over the next
few quarters.Given the current level of the cash rate lies well above the
range of possible neutral rates we see strong justification
for a greater-than-25-point move.
Equally, though, we don’t think that what we are
experiencing is a shock that requires a knee-jerk response.
We’re not in a GFC or a pandemic but we are in a phase
something more akin to a “normal” economic cycle.
Consequently a 75 point move is neither needed nor
desirable.
Capping things off, the market is currently pricing in a 50
point cut and there is no need for the RBNZ to provide a
shock which could result in unnecessary instability in
interest rates, the currency and growth.
***
Earlier:
Reserve Bank of New Zealand rate cut expected on Wednesday 27 November – previewReserve Bank of New Zealand (RBNZ) Shadow Board recommend a 50bp cash rate cut this weekANZ forceast a 50bp interest cut from the RBNZ next weekReuters poll: RBNZ to cut cash rate to 4.25% on November 27Goldman Sachs expects a 50bp Reserve Bank of New Zealand rate cut this month
2pm New Zealand time on the 27th is:
0100 GMT on the 27th2000 US Eastern time on the 26th
This article was written by Eamonn Sheridan at www.forexlive.com.
