What to expect from the Reserve Bank of New Zealand ...


  • Continue to expect another cut in November (a further 25bp)
  • There is a risk of further cuts, particularly if the NZD continue to 'defy RBNZ expectations'


  • Given the dovish guidance, expect another two 25bp rate cuts
  • Expect the next cut in November, followed by another in Q2 2017


  • RBNZ failed to meet bullish market expectations on the forward guidance for the bill rate, indicating a terminal rate of 1.8%
  • RBNZ clearly retains an easing bias
  • Risk profile is for more cuts, but not aggressively


  • Expects a further cut(to 1.75%) in November
  • No further rate moves until 2018


  • September rate cut more likely than the market is currently pricing, but WPAC view is for a November cut


  • Rate cut is very likely before the end of the year
  • Likely to come in November ... unless NZD depreciates before then
  • The RBNZ has signalled further cuts ... it is only likely to deter the strong carry trade flow into the currency ... NZD is likely to continue to appreciate in the short term

(ps. I'm not quite sure what Nomura is saying on next rate cut "likely to come in November ... unless NZD depreciates before then". Maybe the cut comes later if the NZD falls?)