OCR Preview: How far is far enough for the RBNZ?
Westpac economists say there could even be a vote by the RBNZ’s monetary policy committee if members have different ideas on policy strategy. The choice will be a 0.25% and 0.50% cut.
The bank’s chief economist Kelly Eckhold says there could be more information released on individual members’ views. “Consequently, there could be a wide range of views on the policy path next year compared to the projected OCR.”
He says a 0.25% cut next week is well justified. “If a 2.25% OCR can’t do the job, then neither will a 2% OCR.”
He says a depreciating exchange rate will help rebalance demand in a constructive way in the medium term, while also implying inflation won’t fall far through 2%. “Having said that, a 0.50% cut will not be a policy mistake. “More important is to have a high bar on cutting the OCR below 2%.
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