Capital Economics: RBNZ to cut by 0.5% on Thursday

With challenges that face the New Zealand economy continuing to mount Capital Economics now expect the RBNZ to cut interest rates to 2.75% on Thursday and move to 2% by the end of the year. “We previously thought that interest rates would be reduced more gradually to a low of 2.75%. If our new forecasts are right, then the New Zealand dollar could eventually weaken from US$0.65 now to around US$0.55.” Westpac NZ’s Chief Economist, Dominick Stephens similarly expects the RBNZ to cut to 2% by the end of the year. Stephens cited “two major developments over the past week” as being the rationale for a recent forecast shift. The continued sharp decline in global dairy prices and the softness of inflation numbers, to read the more (VIEW LINK)