Following recent sharp falls in oil prices and the related softening in the inflation outlook, there has been speculation about the potential for interest rate reductions by the RBNZ. RBNZ Governor Wheeler used his annual speech to the Canterbury Employers’ Chamber of Commerce to clarify his thinking on this. He effectively poured cold water on the likelihood of near-term rate cuts, noting that the “most prudent option” at the current time is “a period of OCR stability”. This is very much in line with our own view. On our forecasts, the most likely scenario is that we won’t see any change in the OCR until June 2016 at the earliest. So what’s underlying this outlook?
Read the full report: Market Research