RBNZ surprises by holding OCR at 1.0% – ANZ

Sharon Zollner, chief economist at ANZ, points out that contrary to analyst and market expectations, the RBNZ left the OCR unchanged at 1.0% today, despite significantly lowering the near-term growth outlook.

Key Quotes

“The forecast OCR track was all but unchanged, with a low of 0.90% hinting at further action if required.”

“We expect the RBNZ will continue to be disappointed on the growth front, but they have made a meaningful downward revision to their estimate of the economy’s speed limit. This makes future aggressive action less likely.”

“We are now forecasting two further cuts in May and August next year, taking the OCR to 0.5%. The risks around this forecast are tilted towards earlier and/or more cuts, depending partly on the outcome of the RBNZ’s capital proposals.”