Gold prices steady amid Fed rate cut hopes; Trump-Putin talks awaited
Capital Economics projected that the Reserve Bank of New Zealand (RBNZ) will reduce its Official Cash Rate (OCR) by 25 basis points to 3.5% during its upcoming meeting on April 9th.
This forecast is based on the assessment that, while economic activity is improving, any reduction in spare capacity will be slow, leading to a gradual decline in domestically-driven inflation. Capital Economics anticipates that the RBNZ will implement deeper rate cuts than the market currently expects.
The RBNZ had previously executed a third consecutive 50 basis point reduction in February, following advanced notice of its plans. The Committee, expressing increased confidence in its inflation control measures, suggested that conditions allowed for further reductions in the OCR at a swifter pace than was projected in November.
Consequently, the RBNZ has revised its expectation, predicting the cash rate to reach a cyclical nadir of 3.10% by the end of this year, as opposed to the initial forecast of early-2027.
RBNZ Governor Adrian Orr, in his press conference following the February meeting, indicated that the central bank aimed to implement two additional 25 basis point cuts by mid-year. This explicit forward guidance supports the view that the Committee is poised to enact a 25 basis point cut at its next meeting.
However, Orr’s recent and unexpected resignation in early March has introduced some uncertainty regarding the future course of monetary policy.
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