At a recent event, RBNZ Governor Adrian emphasised the need to take a measured approach to policy easing given the "lingering inflation persistence on the domestic side". His remarks support our view that the Bank will hand down another 50bp cut next month, although markets are still pricing in a decent chance of a 75bp move. That said, with the labour market loosening rapidly, we believe the Bank's concerns about persistent domestic inflation will soon diminish. As a result, we still see a strong case for interest rates to ultimately settle at a lower level than many currently anticipate.
Note: We'll be discussing the Australian Q3 CPI release and its implications for the policy outlook and financial markets in a Drop-In on
Wednesday, 30th October. Register here for the 20-minute online briefing.
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