From Westpac this morning:
- We now expect the OCR to be cut by 25bp at each of the July, September and October RBNZ meetings.
WPAC were forecasting 25bp OCR reductions in July and September
- Over the past week emerging news has shifted that fourth cut from a risk scenario to a likelihood. Accordingly, we are now forecasting 25bp OCR reductions in July, September and October. This will take the OCR to a low of 2.5% this year.
WPAC cite:
- A marked deterioration in NZ economic sentiment, evidenced by our Consumer Confidence, Regional Economic Confidence and Employment Confidence surveys, as well as ANZ's Business Outlook survey. We've also detected a distinct souring of business confidence in our visits to businesses and regions around the country.
- This week's sharp reduction in global dairy prices. The RBNZ is currently acutely focussed on dairy prices.
- The sharp sell-off in Chinese equity prices. We are not convinced that Chinese equity prices are a good reflection of the Chinese economy's trajectory. However, financial market volatility is important for confidence. Lower confidence could impact commodity prices and New Zealand businesses' investment and employment decisions.
- Heightened tensions in Greece, which may also affect confidence.
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