Data from New Zealand due today could cement the need for the RBNZ cash rate to head a lot higher
Coming up at 2245 GMT is New Zealand GDP for Q2 2021
GDP (sa) q/q expected 1.4%, prior 1.4%
GDP y/y expected 16.3%, prior 2.4%
April to June data is quite old hat now, especially given the renewed COVID-19 outbreak and lockdown response, which will weigh on Q3 data. Nevertheless, the data should confirm the NZ economy headed into Q3 with impressive momentum.
- While the figures are dated ... the data are likely to suggest a more positive output gap and higher underlying inflationary pressure just before the latest COVID19 outbreak.
- Even though we know that growth in the current Q3 quarter will be dire, owing to the lockdowns, a strong rebound thereafter would add to the sense that the OCR needs to head a lot higher, adding to conviction for rate hikes ahead.
- Our forecast is at the upper end of the market range, and substantially higher than the Reserve Bank's estimate of 0.7%. A result in line with our view would bolster the case for removing some monetary stimulus.