ANZ says the Reserve Bank of New Zealand’s 50-basis-point cut to the Official Cash Rate this week represents a front-loading of its earlier easing plans, rather than a shift toward a more aggressive policy stance.
The central bank’s balanced tone leaves the door open to a pause or further cuts of either 25 or 50 basis points at the next meeting in November, depending on how incoming data evolve, ANZ wrote.
The bank now expects a final 25bp reduction next month, taking the OCR to 2.25%, which it sees as the end of the current easing cycle. Risks remain “on both sides,” ANZ said — weaker data could justify a larger move, but the bar for upside surprises in activity is now relatively low, raising the possibility that the economy could start to outperform modest expectations.
