Data from New Zealand due today could cement the need for the RBNZ cash rate to head a lot higher

Author: Eamonn Sheridan | Category: Central Banks

Coming up at 2245 GMT is New Zealand GDP for Q2 2021

Posted earlier:
  • 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. 

BNZ add:
  • 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.

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