RBNZ Forecast: Big Seven Forecasts, Against Rate Cuts

He Reserve Bank of New Zealand (RBNZ) will announce its interest rate decision on Wednesday, November 29 at 01:00 GMT. These are the forecasts of economists and researchers from seven large banks.

RBNZ expected to hold Official Cash Rate (OCR) at 5.50% for fourth consecutive meeting. Perspectives and tone will be key.

Standard Chartered

We expect the RBNZ to maintain the OCR at 5.50%. We believe it is premature to expect rate cuts in November, considering that CPI inflation slowed to a still high 5.6% year-on-year in the third quarter of 2023. We continue to expect the first rate cut to materialize in May 2024with growth concerns expected to become more evident in the first half of 2024. Risks to our view include more persistent inflationary pressures based on continued macroeconomic resilience, maintaining wage growth and market well-supported work.

ANZ

We expect the RBNZ to keep rates unchanged at 5.50%, and post a very similar trajectory to August (peaking at 5.59%, but with possible subsequent cuts). We don’t expect the RBNZ’s medium-term forecasts for either activity or non-tradable inflation to change significantly (although we would note ours are higher), and the general theme remains “so far so good”.

Westpac

We expect the RBNZ to keep the OCR unchanged at 5.50%. The RBNZ’s forward profile for the OCR is likely to change little and suggest no change to the OCR in 2024. Taken together, recent data will have left the RBNZ more comfortable with a “hold” stance on rates. In particular, price data indicates that imported inflation is declining faster than expected. Additionally, we have continued to see weakness in cyclical demand indicators such as retail spending, PMIs, credit growth and imports. Short-term inflation forecasts will be lowered, but the longer-term profile is likely to be little changed. He RBNZ will want to ensure much of the recent rise in mortgage rates remains in place for some time.

Danske Bank

We expect an unchanged rate decision.

TDS

We expect the RBNZ to remain on hold, keeping the OCR at 5.50%. Although this is an MPS month, implying updated rate tracking, we don’t expect any major revisions to the projection as the RBNZ is likely to maintain a hawkish tone to avoid speculation of earlier rate cuts. Overall, the bank appears satisfied with the current monetary policy setup and is aware that any premature speculation of easing could drive up asset prices and halt current progress.

Citi

Unlike Australia, the CPI in New Zealand is moderating faster than the RBNZ schedule. Therefore, the RBNZ is likely to mark down CPI forecasts to reflect this. Furthermore, weak third-quarter New Zealand labor market data shows that supply and demand are rebalancing and that the Monetary Policy Committee may make a neutral assessment of policy and keep the benchmark interest rate unchanged in 5.50% for the fourth consecutive meeting. However, the RBNZ is unlikely to back down from its intention to maintain expectations that rates should remain restrictive. However, there is a risk that the monetary policy statement will bring forward the OCR moderation from the first quarter of 2025 to the fourth quarter of 2024. We continue to expect that there will be no new OCR increases in this cycle and that the first OCR cut will occur in the second quarter of 2024.

Rabobank

We do not foresee any change in the OCR of 5.50%, and OIS futures suggest that a change in the official interest rate is practically zero probability. What will be interesting to watch is whether the RBNZ updates its guidance on the OCR cap (currently forecast at 5.5%), or the timing of a first rate cut in New Zealand. Currently, the RBNZ does not expect a cut until early 2025, while we We see it as more likely to occur in the last quarter of 2024.