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

 

Scoop Business: RBNZ Starts Talks On Tougher Rules For Property Speculators

The Reserve Bank of New Zealand is stepping up preparations to restrict lending to residential property investors as it watches house prices, particularly in Auckland, continue to rise strongly. More>>

ALSO:

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news