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)