ANZ Weekly: RBNZ turns dovish, Australia discusses tax reform

When the RBNZ cut rates by 25bp at its meeting this week, it acknowledged that it would need to lower the policy rate all the way to 2.5% this cycle – consistent with our longstanding forecast. And while PMI data point to a pickup in activity this quarter, they are unlikely to change the Bank's assessment that the economy remains in a position of significant excess capacity. Elsewhere, Australian policymakers discussed tax reform as a means of boosting productivity growth. Although lowering the company tax rate could prove beneficial, it remains unclear whether the measure will make it onto the legislative agenda.