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Reserve Bank of New Zealand chief economist Conway
- Without future shocks, the OCR will tend towards the neutral interest rate.
- With declining inward migration and weak productivity growth, potential output growth is likely to be modest.
- The long-term nominal neutral interest rate currently lies between 2.5% and 3.5%.
- The Monetary Policy Committee is confident that remaining persistent domestic inflation pressures will abate.
- Easing domestic pricing intentions and a drop in inflation expectations will help open the way for some further easing of the OCR, as signalled in November.
Nothing surprising here, the RBNZ is on a rate cutting path and there are more cuts to come.
This article was written by Eamonn Sheridan at www.forexlive.com.