MNI: FED CHAIR JEROME POWELL SCHEDULED TO SPEAK JULY 2

MNI: BANXICO HOLDS INTERBANK RATE STEADY AT 11.00%

MNI BRIEF: Fed's Bowman Says Policy Appears To Be Restrictive

MNI BRIEF: CNB Cuts 2W Repo Rate By 50Bps To 4.75%

MNI China Daily Summary: Thursday, June 27

MNI BRIEF: China EU In Close Communication - MOFCOM

MNI: FED BALANCE SHEET TOTAL ASSETS -$21B TO $7.231T IN WEEK

US Treasury Auction Calendar

EZ/UK T-Bill Calendar: 1/3/6-Month UKTB Auction on Friday

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

VIEW: Westpac Doesn’t See Budget As RBNZ “Game Changer”

NEW ZEALAND
Homepagemarkets-real-timeBulletMarketsFixed Income BulletsForeign Exchange Bullets

Westpac observes that the 2024 budget showed the fiscal position deteriorating over the forecast horizon but it doesn’t think it will worry the ratings agencies due to low debt and strong governance. It believes the RBNZ will see the increase in the fiscal impulse for FY25 as “unhelpful” but that it isn’t enough to be “a game changer” for the MPC.

  • “A rough proxy of the impact of fiscal policy on aggregate demand can be obtained from the Treasury’s estimate of the Total Fiscal Impulse … The fiscal stance over the past year has been less expansionary than previously estimated, and the stance over the coming year – probably of greatest interest to the RBNZ given current domestic inflation pressures – is no longer estimated to be significantly tighter. The stance in ‘25/26 and subsequent years is now forecast to be slightly tighter than estimated in the HYEFU.”
  • “Given larger operating deficits and capital requirements, forecast NZGB issuance over the next 4 years has been raised by $12bn, including a $38bn programme in the ‘24/25 year. Higher short-term borrowings fund the remaining shortfall.”
  • “NZDM has raised the caps on nominal bond lines to $25bn from $18bn previously, and notes that it does not expect to offer buybacks of the April 2025 bond ahead of maturity.”
  • “Personal income tax cuts – which were exactly as campaigned on ahead of the election – were the centrepiece of the Budget 2024 policy announcements.”
  • “We think that sustained spending restraint may well prove more difficult than assumed in Budget 2024. As a result, attainment of an OBEGAL surplus in ‘27/28 is far from certain.”
270 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

Westpac observes that the 2024 budget showed the fiscal position deteriorating over the forecast horizon but it doesn’t think it will worry the ratings agencies due to low debt and strong governance. It believes the RBNZ will see the increase in the fiscal impulse for FY25 as “unhelpful” but that it isn’t enough to be “a game changer” for the MPC.

  • “A rough proxy of the impact of fiscal policy on aggregate demand can be obtained from the Treasury’s estimate of the Total Fiscal Impulse … The fiscal stance over the past year has been less expansionary than previously estimated, and the stance over the coming year – probably of greatest interest to the RBNZ given current domestic inflation pressures – is no longer estimated to be significantly tighter. The stance in ‘25/26 and subsequent years is now forecast to be slightly tighter than estimated in the HYEFU.”
  • “Given larger operating deficits and capital requirements, forecast NZGB issuance over the next 4 years has been raised by $12bn, including a $38bn programme in the ‘24/25 year. Higher short-term borrowings fund the remaining shortfall.”
  • “NZDM has raised the caps on nominal bond lines to $25bn from $18bn previously, and notes that it does not expect to offer buybacks of the April 2025 bond ahead of maturity.”
  • “Personal income tax cuts – which were exactly as campaigned on ahead of the election – were the centrepiece of the Budget 2024 policy announcements.”
  • “We think that sustained spending restraint may well prove more difficult than assumed in Budget 2024. As a result, attainment of an OBEGAL surplus in ‘27/28 is far from certain.”