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

 

Budget Policy Statement: Spending Wins Over Tax Cuts; Big Ticket Items Get Boost

Income tax cuts are on hold as the government says “responding to the earthquakes and reducing debt are currently of higher priority”, although election year tax sweeteners remain possible. More>>

ALSO:

Fishy: Is Whitebaiting Sustainable?

The whitebait fry - considered a delicacy by many - are the juveniles of five species of galaxiid, four of which are considered threatened or declining. The SMC asked freshwater experts for their views on the sustainability of the whitebait fishery and whether we're doing enough to monitor the five species of galaxiid that make up whitebait. More>>

ALSO:

Crown Accounts: Smaller-Than-Expected Four-Month Deficit

The New Zealand government's accounts recorded a smaller-than-forecast deficit in the first four months of the fiscal year on a higher-than-expected inflow of corporate and goods and services tax. More>>

ALSO:

On For Christmas: KiwiRail Ferries Back In Full Operation After Quake

KiwiRail’s Interislander ferries are back in full operation for the first time since the Kaikoura earthquake, with the railspan that allows rail wagons to be loaded on the Aratere now restored. More>>

ALSO:

Comerce Commission Investigation: Prosecutions Over Steel Mesh Labelling

Steel & Tube Holdings, along with two other companies, will be prosecuted by the Commerce Commission following the regulator's investigation into seismic steel mesh, while Fletcher Building's steel division has been given a warning. More>>

ALSO:

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news