The Reserve Bank of New Zealand performed a bit of a pivot in its brief statement yesterday.


BNZ moved quickly to bring forward its expectation for the first rate cut from the RBNZ to November 2024:

  • The statement, accompanying the expected ‘on hold’ decision, represented a significant moderation in the Bank’s hawkish stance from the May Policy Statement.
  • Unlike May, a rate hike wasn’t discussed, and alongside weak activity it was noted that restrictive monetary policy has ‘significantly reduced consumer price inflation’.
  • As a result of the shift in tone, we have reverted to forecasting the RBNZ will cut rates in November.

NZD/USD update, its been sold on bounces since the statement but has not extended much lower yet. Exuberance (yeah, deliberate choice of word, I'm just holding off adding 'irrational' as a prefix a little while longer) over expected Federal Reserve rate cuts ahead has supported it, and other 'risk' assets:

nzd rbnz bnz forecast 11 July 2024 2