Reserve Bank chief economist Paul Conway acknowledges that financial markets aren’t yet fully buying into the[ir forecasted] scenario [Dec 2024, NZ economy growing at 1.6%, CPI 2.5%, OCR 5.75%, real returns on savings 3.25%].
Kiwibank chief economist Jarrod Kerr notes that at the moment traders are still pricing-in two interest-rate cuts late next year, much sooner than the Reserve Bank is signalling.
But Conway denies the Reserve Bank was just talking tough for effect in the forecasts it issued alongside its monetary policy statement last Wednesday, saying the bank “isn’t playing a game”. The bank’s monetary policy committee is “impatient” to get inflation back into its target band of 1% to 3% and yet there are upside risks to inflation, he says. “What we're saying in the statement is that we don't see the scope for rate cuts until into 2025. We need to be sure that inflation is not only not just ‘sort of dipping’ into the band, but is firmly anchored at that midpoint of 2%. I would say that 2.5% is not job done; our job is to get inflation back to 2%.” https://www.thepost.co.nz/business/3...-next-december
I'd rather believe RBNZ (because of their better visibility of NZ data) than a FT columnist. Looks like NZD is heading higher vs USD - much higher than 65c, as inflation has fallen (and falling) faster in US than in NZ...
The US labour market is still delivering workers monthly wage growth of 0.35% - higher than the 0.2% a month CPI. The Fed would not want to cut rates and see wages and inflation turn higher.
Don’t fight the Fed they say
“Don't focus on short-term swings in price …..better to hope that the price will eventually go higher”
WB
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Originally Posted by winner69
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