Synopsis:

Goldman Sachs has adjusted its forecast for the Reserve Bank of New Zealand (RBNZ), pushing back the anticipated initial rate cut to November after a surprisingly hawkish stance in the May policy meeting. This represents a shift from their previous expectation of a rate cut in August.

Key Points:

• RBNZ May Meeting Outcome: The RBNZ left rates unchanged but discussed the possibility of an increase, indicating a more hawkish perspective than anticipated.
• OCR Track and Inflation Concerns: The OCR (Official Cash Rate) path was adjusted upward compared to the previous statement, reflecting heightened concerns about inflation expectations and potential fiscal stimulus impacts.
• New Rate Cut Forecast: Goldman Sachs now anticipates the RBNZ will initiate rate cuts in November 2024, contingent on reviewing more comprehensive disinflation evidence in upcoming quarterly CPI data.

Conclusion:

Goldman Sachs' revised forecast aligns with a cautious RBNZ approach, awaiting further disinflation confirmation before adjusting rates downward. This adjustment underscores the central bank's commitment to maintaining stability amidst fluctuating economic indicators and potential fiscal changes.