Reserve Bank of New Zealand Meeting

The RBNZ cuts the OCR and signals more reductions.

RBNZ: MNI RBNZ Review - August 2024: RBNZ Plans "Cautious" Easing * The RBNZ delivered a 25bp cut bringing rates to 5.25% as it decided to "ease the level of monetary policy restraint" due to greater excess capacity, confidence that inflation will return to the band in Q3 2024, downside risks and inflation expectations at the target mid-point. * There were significant downward revisions to the OCR path. The new profile implies a further 1-2 cuts by end-2024 and at least 100bp in 2025. In May, a rate hike by end-2024 was implied. * As a result of greater excess capacity and lower import prices, there was a large downward revision to Q3 2024 CPI to 2.3% from 3.0% in May, close to the band mid-point. It is expected to stay around this rate through 2025 before reaching the 2% mid-point in Q2 2026, which is unchanged. * Going into yesterday's meeting the market had priced a 58% chance of a 25bp cut. The market now prices 39bps of easing for the next meeting, with a cumulative 82bps by November. * See full review here: https://roar-assets-auto.rbl.ms/files/65855/MNI%20RBNZ%20Review%20-%20August% 202024.pdf.