Halister News

(Bloomberg) -- RBNZ statement is slightly more upbeat on economic assessment and hints of a small chance of just one more rate cut this year to temper the strength of the kiwi, analysts from ANZ, Capital Economics and Barclays say.

• RBNZ kept key rate at 2.25% today, saying it expects inflation to accelerate and is concerned about house prices
• Governor Wheeler says further easing may still be needed

• ANZ Wellington (Cameron Bagrie)
  • Door is open to a cut, on kiwi strength more than anything
  • Sees odds of a cut in August at just over 50%
  • Also sees increasingly credible scenarios where no further easing is delivered
  • Besides dairy, the economy is performing well

• Capital Economics (Paul Dales)
  • Still sees a chance that rates may have to decline to 1.75%, although not until very late this year or even next year
  • RBNZ moving slower for three reasons:
    • Less concerned on global outlook and previous fall in inflation expectations
    • More positive on the outlook for GDP growth and inflation
    • RBNZ has become less worried by recent kiwi strength and more worried by the recent strength of the housing market

• Barclays (David Fernandez)
  • Expects RBNZ to ease by another 25 bp in 4Q16, after impact of potential macro-prudential measures are felt in property market
  • RBNZ seems less concern on NZD levels with kiwi depreciation dialed back to “expectation” from “desirable”, reflecting reduced concerns over weakness in dairy sector despite “export prices below break-even levels for most farmers”