🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

RBNZ holds interest rates, BCA Research predicts future cut

Published 05/23/2024, 09:08 AM
NZD/USD
-

The Reserve Bank of New Zealand (RBNZ) decided to maintain its current interest rates, highlighting three significant deviations from its February Monetary Policy Statement.

The central bank noted that non-tradable inflation has been more persistent than anticipated, and leading indicators suggest a continuing decline in the domestic economy's health. Moreover, the RBNZ observed a concerning trend of a narrowing output gap, attributed to decreasing productivity and potential growth rather than an uptick in demand.

This combination of stagnant growth and persistent inflation, which can be described as a pseudo-stagflationary environment, prompted some debate among policymakers about the possibility of raising interest rates. Consequently, the forecast trajectory for the Official Cash Rate (OCR) was revised upwards during the meeting.

Despite the recent discussion of potential rate hikes, BCA Research holds a different perspective regarding the RBNZ's monetary policy direction. BCA Research anticipates that the RBNZ has concluded its interest rate increases for the previous year. The firm forecasts that the central bank's next move will likely be to reduce rates. This outlook is based on the expectation that the more stubborn elements contributing to inflation will subside as the year progresses.

BCA Research's analysis suggests that the easing of these inflationary pressures should occur towards the end of the year. This projection aligns with their belief that the RBNZ will shift to a more accommodative monetary policy stance in the near future. The firm's outlook provides an alternative view to the central bank's current policy trajectory, suggesting a potential easing of monetary policy ahead.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.