NZ GDP to reduce chances of RBNZ cut - ANZ

Analysts at ANZ, in respect of NZ GDP today, explained that when all is said and done, they view the figures as a respectable result following a strong pace of growth over the second half of 2015.

Key Quotes:

"There are risks to the outlook (global scene, dairy cash flow, elevated NZD etc), but when we consider the following, our base case is that reasonable rates of growth will continue (volatility aside) over the next year or so:

• −  Indicators for Q2 are generally providing a decent signal. Primary activity should bounce and business and consumer confidence remain at decent levels.

• −  Despite the elevated NZD, financial conditions remain supportive. The effective mortgage rate continues to fall. Tailwinds from migration and the construction sector pipeline persist.

• −  Credit growth remains strong, supporting spending, although this does admittedly raise some medium-term sustainability questions.

  Today’s result was a little above the RBNZ’s June MPS pick (0.6% q/q) and so at the margin should reduce the odds of an August rate cut. However, the upcoming CPI and labour market data should carry far more weight in that regard. The odds still favour an August cut (on currency strength and global wobbles alone), but it is not a conviction view."