While Reserve Bank of New Zealand Governor Orr continues to speak in parliament committee, another 'more to come' response to yesterday's shock announcement.
This in brief from a detailed note via Capital Economics:
- Governor highlighted a couple of bright spots in the economy. Most notably, the governor was upbeat about the recent decline in the unemployment rate in Q2 from 4.2% to 3.9%, and the slight pick-up in wage growth
- But ... Committee more concerned about trade tensions noting in the minutes that business confidence could remain low on the back of international headwinds and that "heightened global uncertainty was reducing investment and suppressing trading-partner growth"
- the "balance of risks to achieving its consumer price inflation and maximum sustainable employment objectives was tilted to the downside"
The TLDR versions from CE:
- we now expect the Bank to cut rates from 1.0% today to 0.75% in February
