Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


PwC expectations ahead of June Monetary Policy Statement


PwC expectations ahead of the Reserve Bank’s June Monetary Policy Statement


Ahead of the Reserve Bank’s Monetary Policy statement (MPS) being released tomorrow, PwC Director and economics expert Chris Money says, “We expect the RBNZ to hike the OCR by another 25bps (to 3.25%) but revise lower its GDP and inflation forecasts allowing it to also revise lower the pace of future hikes.

“The March MPS was extremely ‘aggressive’ in regards to its projected OCR track. Those forecasts helped to fuel a materially stronger NZD than the RBNZ expected. Independently, dairy prices have dropped without any material adjustment in the currency. The divergence between these two is extremely important due to the impact they can have on rural incomes. Lower rural income/spending and investment suggests lower GDP growth (and related demand-side inflation).

“The higher dollar has also helped suppress inflation and so these forecasts should also be revised a touch lower (see charts below). Taken together, less imminent inflation and inflation pressures (albeit due to a strong NZD) may not require as many OCR hikes as they previously indicated.

“From a market perspective, short-term swap rates have fallen below a level we believe is economically/fundamentally justified when considering the likely path of the OCR in coming years.

“Accordingly, short-term swap rates could actually rise after the meeting; however we expect a reasonably limited reaction in interest rate markets. The more interesting reaction to watch will be the currency given the RBNZ’s discomfort with the NZD’s level now that dairy prices have decreased. The RBNZ want a lower currency and we are looking for them to give this some ‘air time’,” concludes Mr Money.


-ends-

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Maritime: Navigation Safety Review Raises Big Issues For The Govt

Shipping Federation: "The reports makes it clear that the ratification of the Maritime Labour convention (MLC) is long overdue. Only when the MLC is ratified will Maritime NZ be able to inspect and enforce the labour conditions on international ships visiting our ports." More>>

ALSO:

100 Years After Einstein Prediction: Gravitational Waves Found

For the first time, scientists have observed ripples in the fabric of spacetime called gravitational waves, arriving at the earth from a cataclysmic event in the distant universe. This confirms a major prediction of Albert Einstein’s 1915 general theory of relativity and opens an unprecedented new window onto the cosmos. More>>

ALSO:

Farming: Alliance Plans To Start Docking Farmer Payments

Alliance Group, New Zealand's second-largest meat cooperative, plans to start withholding some stock payments to its farmers from next week to bolster its balance sheet and force suppliers to meet their share requirements. More>>

ALSO:

Gambling: SkyCity First Half Profit Rises 30%, Helped By High Rollers

SkyCity anticipates the Auckland business will benefit from government gaming concessions which were triggered on Nov. 11 in recognition of SkyCity’s $470 million Convention Centre development. Morrison said the concessions would allow the Auckland business to lift its activity during peak period, noting it had a record revenue week over the Christmas and New Year period. More>>

ALSO:

Money For Light: Kiwi Scientists Secure Preferential Access To Synchrotron

Science and Innovation Minister Steven Joyce today announced a three-year investment of $2.8 million in the Australian Synchrotron, the largest piece of scientific infrastructure in the Southern Hemisphere, to secure preferential access for Kiwi scientists. More>>

Telco Industry Report: Investment Hits $1.7 Bln A Year

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector. More>>

ALSO:

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news