RBNZ: 50% chance of a cut in August - Westpac

Imre Speizer, Senior Market Strategist at Westpac, suggests that market pricing for the OCR implies a 50% chance of a cut in August, which seems fair given the RBNZ’s most recent assessment of conditions plus the range of potential outcomes over the next two months until the next meeting.

Key Quotes 

“Last week the RBNZ hit the pause button on further interest rate cuts. It retained its easing bias, and a further cut in the August remains more likely than not, but this is by no means set in stone. Much will depend on what happens in the New Zealand economy (and offshore) over the next couple of months. In particular, the strength of the NZ dollar will be weighed against pressures emanating from a rampant housing market. And there are early signs that inflation may be reversing from extremely low levels, such that the Q2 CPI result (published in July) will be important.”