Although financial markets aren’t fully convinced, we believe the Reserve Bank of New Zealand will lower its policy rate by 50bp at its meeting ending on 8th October. With the output gap deeply negative, the Committee will want to mitigate downside risks to the medium-term inflation outlook. We then expect it to close out the easing cycle with a 25bp cut in November, giving incoming governor Anna Breman a fresh start when she takes office in December.
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