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May 23 - 02:55 PM

Goldman Sachs: Revising RBNZ Rate Outlook Post-May Policy Meeting

By eFXdata  —  May 23 - 01:30 PM


Goldman Sachs updates its forecast for the Reserve Bank of New Zealand's (RBNZ) monetary policy following the unexpected developments at the May policy meeting.

Key Points:

  • May Meeting Outcome: The RBNZ held the Official Cash Rate (OCR) steady at 5.50%, as anticipated. Notably, the meeting summary revealed discussions about a potential rate hike, underscoring the central bank's hawkish tilt.
  • Governor Orr's Comments: In a post-meeting Q&A, Governor Orr indicated that raising rates was seriously considered, highlighting ongoing concerns about inflationary pressures within New Zealand.
  • Revised Rate Cut Forecast: Goldman Sachs now anticipates that the RBNZ will begin its easing cycle in November 2024, a delay from the previously forecasted August start. This adjustment is based on the central bank's desire for more concrete signs of disinflation.
  • Future CPI Data: Key upcoming data releases include the 2Q2024 CPI on July 17 and the 3Q2024 CPI on October 17, which will be critical in shaping the RBNZ's policy trajectory.
  • Long-Term Rate Outlook: While the start of rate cuts has been pushed back, Goldman Sachs maintains its expectation for a methodical reduction in rates, aiming for a terminal rate of 3.25%.

Conclusion: The recent hawkish signals from the RBNZ, underscored by discussions of a possible rate hike, suggest a cautious approach to monetary easing. Goldman Sachs has adjusted its expectations for the timing of rate cuts, now foreseeing a commencement in November 2024. This outlook hinges on forthcoming inflation data, which will be crucial for confirming the disinflation trend necessary for rate reductions.

Goldman Sachs Research/Market Commentary


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