Monday, November 2, 2015

RBNZ: Chance of a cut in December 30% - ANZ

FXStreet (Bali) - ANZ is presently out of consensus in expecting the RBNZ to cut rates in December, noting the Central Bank is set to go through a period on the side-lines, expected to last into 2016, with the chance of a cut in December assigning odds of 30%.

Key Quotes

"In the aftermath of the RBNZ’s decision to keep the OCR on hold at 2.75%, we have once again found ourselves out of consensus on our views for the monetary policy outlook from here – as we were in May and June. But this is not because we think that the easing cycle is over; far from it."

"With growth still subtrend (albeit stabilising) and inflation low (and the high NZD delaying the return of inflation to 2%), one further 25bp cut in the OCR to 2.5% remains our base case."

"In fact, the risk profile is skewed towards more easing beyond that! Where we differ to the consensus is in our view of how long the RBNZ will be on hold."

"Whereas the consensus is almost unanimous in expecting the RBNZ will cut again at its next opportunity in December, we believe further easing will be a 2016 story (March)."

"Of course, the probability of a cut in December is not zero; we would place the odds at around 30%."
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