Predictions for big OCR drop next month

Westpac is going even further and forecasting another 0.25% RBNZ cut in November taking the OCR down to a stimulatory 2.25%.

Both banks had expected a 0.25% cut in both October and November but have lifted their forecasts after the economy shrank by a deep 0.9% over the June quarter. On an annual basis, the economy contracted 0.6%.

Weakness was broad-based, with 10 of the 16 measured industries recording a decline in output.

Kiwibank chief economist Jarrod Kerr says the contraction proves that once again the RBNZ finds itself playing catch up to the deteriorating economy, rather than leading the country out. “Enough is enough. Where monetary policy settings are today are clearly not enough.”