Reuters Poll: RBNZ Expected to Downshift to 25 bps Increase in April as Tightening Cycle Approaches Its End
What is RBNZ?
The Reserve Bank of New Zealand (RBNZ) is New Zealand’s central bank. It was established in 1934 and is responsible for monetary policy, currency supply and circulation, and financial stability.
What is the Reuters Poll?
The Reuters poll is a survey conducted by the news agency Reuters, which gathers market and economic data from different sources. In this poll, Reuters asked 19 economists for their predictions about RBNZ’s upcoming monetary policy decisions.
What are the results of the poll?
According to the Reuters poll, RBNZ is expected to downshift to a 25 basis points (bps) increase in April, as the tightening cycle approaches its end. This means that RBNZ is likely to raise its official cash rate (OCR) by 25 bps to 1.5% in April, a slower pace of monetary tightening compared to the previous year.
Why is RBNZ expected to downshift?
The main reason for RBNZ’s expected downshift is the softening economic growth in New Zealand. The country’s gross domestic product (GDP) grew by 0.3% in the third quarter of 2018, the slowest pace in five years. In addition, inflation remained below the central bank’s target band of 1-3%, which gives RBNZ less incentive to raise interest rates.
What are the economists’ views?
Most economists in the Reuters poll expect RBNZ to hold its OCR steady at 1.75% in February and then to raise it by 25 bps in April. However, some economists expect RBNZ to hold off on any further rate hikes until later in the year, as they believe the central bank will remain cautious given the uncertain global economic outlook.
According to the Reuters poll, RBNZ is expected to downshift to a 25 bps increase in April, as the tightening cycle approaches its end. The main reason for this downshift is the softening economic growth in New Zealand and the lower inflation rate. Most economists expect RBNZ to hold its OCR steady in February and then to raise it by 25 bps in April. #BUSINESS