Local NZ Bank Brings Forward RBNZ Rate Cut Forecast

Local NZ Bank, ASB, has bought forward its projected rate cuts from the RBNZ, see below for more details.

"We have brought forward our forecast for the first OCR cut to August 2024, six months earlier than our previous view. We think the recent GDP release was significant: it showed momentum in the economy is grinding to a halt more rapidly than anticipated. We expect weakness will continue into 2024. If it does, inflation pressures are likely to reduce quicker than we had been previously thinking.

Although current headline inflation is still high, we are also seeing encouraging signs in recent monthly pricing data that show inflation is falling slightly quicker than the RBNZ had recently been expecting. And while there will be pockets of migration-driven concern for the RBNZ, such as rents and any potential rebound in construction costs, we expect that by the second half of next year the inflation outlook will be comfortable enough for the RBNZ to cut."