Westpac revise their forecast to December for next RBNZ rate cut

Previously they had plumped for Oct but now feel OCR (official cash rate) will remain on hold a little longer

MNI reporting for all you Westpac watchers

Economists at Westpac have revised their view on the RBNZ OCR, now
expecting a pause at the October OCR review before resuming cuts in December,January and March. They emphasize their view for a terminal OCR of 2% has not changed because they're sceptical the lower kiwi will generate the sustained degree of inflation pressure that the RBNZ is forecasting.

"Instead, we think that the initial burst of inflation will be short-lived, and that further interest rate cuts will be needed to maintain inflation around the 2% target midpoint over the medium term.

"Recent developments, on balance, have probably pushed the RBNZ further away from delivering a fourth consecutive cut. Most importantly, world dairy prices have rebounded sharply in recent weeks, compared to the RBNZ's assumption that they would remain at depressed levels for quite some time."

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