Reserve Bank expected to stick to its knitting

The clear consensus in the investor community is that the RBNZ will have to ease monetary conditions a lot earlier than it has been suggesting.

This is fully revealed in the fact that a rate cut in November of this year is fully priced.

While trading banks’ economists believe rate cuts will eventually occur sooner than the fourth quarter of next year as was indicated in the RBNZ’s May Monetary Policy Statement, they think the RBNZ will stick to its knitting this week.

They say the RBNZ will likely acknowledge that economic activity is faltering but continue to warn that it is in no rush to respond to that.