Our ANZ Chart Pack has been updated with the latest data and our analysis of recent developments.
The RBA began its easing cycle with a 25bp cut this month, but it appeared in no hurry to loosen policy settings further. We expect the Bank to cut again in May and August, with the cash rate bottoming out at 3.60%. In contrast, the RBNZ has already cut rates by 175bp since last August. Given substantial spare capacity in the economy, we believe the RBNZ will have to cut rates much further to mitigate the risk of inflation undershooting its target. Accordingly, we’re forecasting a terminal policy rate of 2.25%, which is significantly lower than what markets and the analyst consensus are anticipating.
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