More firms weigh in with their thoughts on what to expect next
Citigroup's senior economist, Josh Williamson, says that the firm now expects the RBNZ to hold its OCR at 1.50% this year and 'for the foreseeable future'. The firm previously expected a follow-up rate cut to the one today in August.
Adding that the removal of another rate cut was prompted by a neutral guidance from the RBNZ committee, saying that "the policy assessment suggests that this was a fine-tuning move and not the start of a new longer easing cycle".
Meanwhile, Bank of New Zealand (BNZ)'s head of research, Stephen Toplis, is of a different view, arguing that the firm now sees the RBNZ cutting rates one more time this year to 1.25% in November.
BNZ previously had a forecast that the RBNZ would leave the OCR unchanged at 1.75% until early 2021. Here's their current take:
"Against our better judgment, we will therefore include a second rate cut into our forecasts to acknowledge the RBNZ's dovish leanings. We expect the next cut to be in November but we are ambivalent between August and November and will be watching the data closely."
Adding that there is the possibility that conditions will eventually prevent a second rate cut this year as well.
For some context, the OIS market pricing has just a 37.5% probability of a rate cut in August currently; not a great deal priced in to be honest.
