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RBNZ: Westpac Now Sees Two 50bps Cut Before Year End

RBNZ
Central Bank NewsRBNZAPACNew ZealandBulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

WESTPAC: "Westpac now forecasts two 50bp cuts to the OCR at the October and November RBNZ policy meetings, taking the OCR to 4.25% at the end of 2024. 2025 is expected to see just two 25bp cuts taking the OCR to the assumed terminal rate of 3.75% by mid-2025. 

  • The projected step up in the pace of easing in October is a more finely balanced decision (perhaps a 60% probability) whereas the probability of a larger easing in November looks much higher.
  • The inflation outlook now looks set to settle close to 2% from Q3 2024 and gives the RBNZ more room to move more quickly back to neutral settings.
  • We continue to see the terminal OCR at 3.75% - the cuts expected by Christmas merely bring the OCR closer to neutral more quickly.
  • We don’t see a case for expansionary settings as there are tentative signs the economy is responding to easier conditions.
  • We hope the RBNZ will be more circumspect on how quickly the OCR will change in 2025 as the OCR will be closer to neutral wherever defined."  
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WESTPAC: "Westpac now forecasts two 50bp cuts to the OCR at the October and November RBNZ policy meetings, taking the OCR to 4.25% at the end of 2024. 2025 is expected to see just two 25bp cuts taking the OCR to the assumed terminal rate of 3.75% by mid-2025. 

  • The projected step up in the pace of easing in October is a more finely balanced decision (perhaps a 60% probability) whereas the probability of a larger easing in November looks much higher.
  • The inflation outlook now looks set to settle close to 2% from Q3 2024 and gives the RBNZ more room to move more quickly back to neutral settings.
  • We continue to see the terminal OCR at 3.75% - the cuts expected by Christmas merely bring the OCR closer to neutral more quickly.
  • We don’t see a case for expansionary settings as there are tentative signs the economy is responding to easier conditions.
  • We hope the RBNZ will be more circumspect on how quickly the OCR will change in 2025 as the OCR will be closer to neutral wherever defined."