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RBNZ to cut rates from 3.5% to 3% by year end - Capital Economics

FXStreet (Bali) - Paul Dales, Chief Economist Australia / New Zealand at Capital Economics, expects the key policy rate in New Zealand to fall from 3.5% now to 3.0% by the end of the year.

Key Quotes

New Zealand headline CPI inflation fell to a 15-year low of 0.1% in Q1 from 0.8% in Q4, largely due to a plunge in petrol prices. (Data released on Monday.) Looking ahead, with petrol prices now rising, headline inflation should rebound in the second quarter.

But we believe that a softening in GDP growth this year will prevent underlying inflation from rising as far as the RBNZ expects. It should instead stay close to the lower bound of the Bank’s 1-3% target range. This explains why we believe that the key policy rate will fall from 3.5% now to 3.0% by the end of the year. (Paul Dales)

Investors more patient on a Greek resolution - Credit Agricole

The Strategy Team at Credit Agricole, via eFXNews, notes that the lack of contagion from Greece suggests that investors are willing to wait longer for a resolution on upcoming payments to creditors if needed.
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