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MNI RBNZ Review-November 2024: Door Open For Another 50bp Cut

The RBNZ cut rates 50bp to 4.25% as was widely expected.
New ZealandCentral Bank ReviewCentral Bank ReportsAPACStoryRBNZ - ReviewMarkets

EXECUTIVE SUMMARY: 

  • The RBNZ cut rates 50bp to 4.25% as was widely expected by economists and the market as it felt “more confident to continue removing” policy restrictiveness given inflation is close to the target mid-point and underlying measures are “converging” on it. 
  • It published a revised set of forecasts, which if the economy develops close to its expectations it should be able to ease further. Governor Orr said that the MPC kept the door open for another 50bp of easing in February given that policy is still restrictive. 
  • A return to a “neutral world” is currently projected and hoped for. The RBNZ estimates the neutral rate at 2.5-3.5% with policy expected to return to the top of that range by end-2025, thus policy stays restrictive through 2025, and to the mid-point at the end of 2026. 
  • 42bps of easing is priced for February, with 97bps by November 2025.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: MNI RBNZ Review - November 2024.pdf

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EXECUTIVE SUMMARY: 

  • The RBNZ cut rates 50bp to 4.25% as was widely expected by economists and the market as it felt “more confident to continue removing” policy restrictiveness given inflation is close to the target mid-point and underlying measures are “converging” on it. 
  • It published a revised set of forecasts, which if the economy develops close to its expectations it should be able to ease further. Governor Orr said that the MPC kept the door open for another 50bp of easing in February given that policy is still restrictive. 
  • A return to a “neutral world” is currently projected and hoped for. The RBNZ estimates the neutral rate at 2.5-3.5% with policy expected to return to the top of that range by end-2025, thus policy stays restrictive through 2025, and to the mid-point at the end of 2026. 
  • 42bps of easing is priced for February, with 97bps by November 2025.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: MNI RBNZ Review - November 2024.pdf