The New Zealand Institute of Economic Research indicated today that it expects RBNZ to implement another interest rate cut during its October meeting. This follows RBNZ’s decision in August to bring forward its easing cycle in response to “deterioration in economic outlook.” However, NZIER notes that the pace of further easing remains highly uncertain, with a potential pause in November depending on how quickly demand recovers.
Weaker demand has become a significant concern for businesses, with 61% of firms identifying it as the primary constraint on their operations. This declining demand is also having an impact on the labor market, where there is now more slack as companies reduce hiring in response to the softer economic environment.
Looking ahead, NZIER forecasts GDP growth to remain subdued over the next year, contributing to further decline in inflation. The institute predicts that annual CPI inflation will fall back within RBNZ’s target band by the end of this year, which underpins its expectation for another Official OCR cut in October.
However, the uncertainty surrounding the economic recovery suggests that any further rate cuts after October will be closely tied to the extent of demand recovery, with the November meeting likely to be a key decision point.
![Pinterest](https://pinterest.com/pin/create/button/?url=https://www.actionforex.com/live-comments/566133-nzier-expects-oct-rbnz-rate-cut-further-easing-hinges-on-demand-recovery/&media=https://www.actionforex.com/wp-content/uploads/featured-images/f-nz1.jpg&description=The New Zealand Institute of Economic Research indicated today that it expects RBNZ to implement another interest rate cut during its October meeting. This follows RBNZ's decision in August to bring forward its easing cycle in response to "deterioration in economic outlook." However, NZIER notes that the pace of further easing remains highly uncertain, with a potential pause in November depending on how quickly demand recovers.){kind=link}