RBNZ to cut cash rate to 2.75% on October 8th, say 15 of 26 economists - poll

RBNZ to cut cash rate to 2.75% on October 8th, say 15 of 26 economists - poll

New Zealand's Reserve Bank of New Zealand (RBNZ) is widely anticipated to lower its official cash rate to 2.75% on October 8th, according to a recent poll of economists. This move is part of the central bank's ongoing efforts to support the economy, following a series of economic indicators that have shown signs of slowing down.

The poll, conducted by a leading financial institution, revealed that 15 out of 26 economists surveyed expect the RBNZ to make this cut. The decision comes amidst growing market expectations for further rate cuts, with some traders already pricing in two more cuts after October, despite the lack of new inflation data to justify such optimism.

ING, a prominent financial services company, has cautioned that market hopes for more aggressive easing might be running ahead of reality. The bank expects one further cut in November to a terminal rate of 2.50%, and warns that the RBNZ's message next week is unlikely to be significantly more dovish. If the central bank decides to go bolder, it could temporarily weaken the New Zealand dollar, but for now, the rate curve reflects high expectations, with markets eagerly awaiting the upcoming inflation data.

For markets, the enthusiasm for rapid RBNZ cuts has already pushed the New Zealand rate curve lower, fully pricing in three cuts from 3.0%. However, there is a risk that markets could be caught offside if inflation figures are stickier than expected. This could lead to a sudden adjustment in bond yields and the New Zealand dollar, shaking up short-term trends.

The RBNZ's policy is not isolated; it is influenced by global forces, such as the softening US dollar. ING still sees the New Zealand dollar (NZD) strengthening into the year-end, as much of the monetary easing has already been priced in. The real story will unfold with the upcoming inflation data: if prices cool faster than forecast, the trend toward looser policy could gain speed, echoing similar moves among major central banks this year.

https://finimize.com/content/rbnz-set-to-trim-rates-but-ing-urges-caution-on-further-cuts