Relax ... its about a rate cut from the Reserve Bank of New Zealand

ASB is expecting an October cut (vs. a later move) to the Official Cash Rate

ASB highlight that there were, this week, 3 very influential events for the RBNZ's near-term OCR decisions:

  1. GDT dairy auction - was very strong ... but part of the price strength is from the weak outlook for production, and this will result in lost income. ASB say "The dominant GDP growth impact is likely to be negative, through the weak milk production and impact on downstream processing and export activity".
  2. Q2 GDP - was softer than RBNZ expectations
  3. & the US Federal Reserve interest rate decision - the RBNZ has been waiting for a hike to assist the NZD/USD lower, but now there will be a longer wait

They say that the impact of these events is mixed, and have decreased the chances of an October cut slightly. They still expect the RBNZ to cut the OCR next in October, as opposed to waiting until December (the most likely alternative). But the decision is a lineball call.


Nice work from ASB. It's the lineball calls that are always the most interesting.