RBNZ's upcoming statement to echo February’s sentiments, economist predicts
ASB Bank’s Chief Economist Nick Tuffley (pictured above) anticipates the Reserve Bank (RBNZ) will maintain the OCR at 5.5%, citing “few signs it is shifting its views on when OCR cuts will start.”
Despite a mix of minor news since the February Monetary Policy Statement (MPS), the outlook remains largely unchanged, with RBNZ expected to hold a similar stance.
Inflation and growth: A mixed picture
Recent data suggested a slight uptick in short-term inflation, potentially surpassing RBNZ’s expectations for the first quarter, while economic growth continues to falter.
“The inflation implications of the May Budget remain unclear, so there is little fresh fiscal news,” Tuffley said.
Despite these challenges, November remains ASB’s prediction for the RBNZ’s first OCR cut, given enough time to assess crucial inflation and labour market data.
Economic indicators since February
Since RBNZ’s last MPS, the economic landscape has aligned with expectations, with short-term inflation pressures slightly higher but balanced by risks of weaker activity.
Key observations include Q1 inflation likely exceeding RBNZ forecasts due to factors like accommodation and international travel costs, and a drop in both consumer and business confidence.
Expectations for the April statement
Tuffley anticipates RBNZ’s upcoming statement will echo February’s sentiments, emphasising the economy’s alignment with prior forecasts and the continued need for a restrictive OCR to manage inflation.
“It is unlikely the RBNZ has moved closer to cutting the OCR,” he said, suggesting growth underperformance as a more significant consideration for future decisions.
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