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: Wheeler Downplays Scope For ‘Large’ Rates Fall

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

ALSO:

Ruataniwha Dam: Consent Conditions Could Mean Reduced Intensity

Legal advice sought by the Hawke’s Bay Regional Council on the Ruataniwha Dam consent conditions has confirmed that farmers who sign up to take water from the dam could be required to reduce the intensity of their farming operation to meet the catchment’s strict nitrogen limit. More>>

Health And Safety: Bill Now Sees Rules Relaxed For Small Businesses

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

ALSO:

Bearing Fruit: Annual Fruit Exports Hit $2 Billion For First Time

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>

ALSO:

Interest Rates: NZ Dollar Jumps After RBNZ Trims OCR

The New Zealand dollar jumped more than half a US cent after Reserve Bank governor Graeme Wheeler cut the official cash rate by a quarter-point and said the currency needs to be lower, while dropping a reference to criteria that justified intervention. More>>

ALSO:

Drones: New 'World-Class' Framework For UAVs

The rules, which come into effect on 1 August, recognise the changing environment and create a world-class framework that accommodates ongoing development while still ensuring the safety of the public, property and other airspace users. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news