RBNZ: Rough end of the 'Kiwi', change of call – TDS

The New Zealand Institute of Economic Research (NZIER) Quarterly Survey of Business Opinion (QSBO) for Sep 2024 calls for more aggressive RBNZ action, TDS FX analysts Prashant Newnaha and Alex Loo note.

RBNZ to deliver sequential cuts in 2025

“We stick with a 50bps cut in the Overnight Cash Rate (OCR) at next week's Monetary Policy Review (MPR) meeting. However, we change our call for the Nov Monetary Policy Statement (MPS) meeting from a 25bps cut to a 50bps cut.”

“For 2025, we now expect the RBNZ to deliver sequential cuts, with the OCR hitting 3% by the August meeting. Our prior forecast assumed the RBNZ getting to 3% with cuts delivered only at MPS meetings in 2025 and 2026.”

“There have been limited changes to our bond forecasts given our prior bullish rates stance. We see limited scope for a significant rally in rates from here based on domestic factors. Our bias is to trim/close long/received positions on strength.”