Waiting on the RBNZ

What to Expect from the RBNZ Meeting Next Week

Posted Friday, August 2, 2019 by
Arslan Butt • 1 min read

At next week’s meeting, the Reserve Bank of New Zealand (RBNZ) is widely expected to cut rates and bring them down to record lows. Amid rising trade tensions and weakening economic growth globally, New Zealand’s economy has also been strained.

Like several leading central banks around the world, the RBNZ could also introduce further stimulus measures to support the NZ economy over rising threats to global economic growth. Economists are expecting the RBNZ to announce a 0.25% rate cut, which would bring the Official Cash Rate (OCR) down to 1.25%. There are also expectations that another rate cut could be delivered before the end of this year, bringing the OCR down to 1% as well.

The prolonged US-China trade war has dented the market sentiment and affected several leading economies lately, and New Zealand is no exception. During the last meeting in June, RBNZ Governor Orr had alluded to the issue of further rate cuts and how they are a possible solution as economic risks grow, both domestically and around the world.

Recent economic data from New Zealand lends further support to the rate hike sentiment, with business outlook sinking to the lowest level in 11 months during July. Consumer confidence has also dipped lower, while dairy prices have also declined. In addition, GDP growth is also expected to weaken.

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