ANZ Bank Predicts 50 Basis Points Rate Cuts by October

ANZ Bank has revised its forecast for the Reserve Bank of New Zealand's official cash rate, now expecting a more aggressive reduction to 2.5% to support economic recovery. The bank's Chief New Zealand Economist, Sharon Zollner, anticipates that the central bank will lower the policy rate by 25 basis points in both August and October. This revised forecast is more aggressive than the previous one, which had predicted rate cuts in May and July, lowering the rate to 3%.

Zollner noted that while economic recovery is underway, it has been uneven and fraught with uncertainties. The persistent uncertainty in global trade and the dimming prospects for global growth could dampen investment and broader risk appetite. She emphasized that the economy requires additional support from monetary policy to ensure that the recovery stays on track. The anticipated rate cuts are aimed at providing the necessary stimulus to bolster economic activity and mitigate the risks posed by global economic headwinds.

The bank has also revised its GDP growth forecast for 2025, now expecting a 1% increase, down from the previous estimate of 1.3%. This adjustment reflects the bank's assessment of the current economic landscape and the need for more robust policy measures to foster growth. The anticipated rate cuts are aimed at providing the necessary stimulus to bolster economic activity and mitigate the risks posed by global economic headwinds.