BNZ bank expects the Bank of New Zealand to cut the interest rate by 50 basis points next week, as the bank's forecasts are considered bold, although they also predicted a possible cut of 25 basis points and ruled out any interest rate fixing.
BNZ bank based its forecast for a reduction of 50 basis points on these reasons:-
- The Consumer Price Index is heading below 2.0%.
- Weak labor market.
- Price settings should quickly move towards neutrality.
The bank said that we believe that the deflationary parameters that we received will dominate, and that this encourages the New Zealand Reserve to accelerate the easing process.
The National Bank of New Zealand also outlined the arguments against cutting interest rates by 50 basis points and reaching only 25 points, namely:
- The power in the ANZ Bank survey.
- GDP for the third quarter increased to activity levels by 0.2% more than expected and private consumption by 1.3% above expectations.
- The constant rise in non-negotiable inflation.
- Increased confidence in the housing market.
- Concern that the current market pricing of future interest rate cuts is exaggerated.
