{"id":163715,"date":"2025-12-02T04:02:09","date_gmt":"2025-12-02T04:02:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/163715\/"},"modified":"2025-12-02T04:02:09","modified_gmt":"2025-12-02T04:02:09","slug":"international-economists-pick-reserve-bank-will-have-to-cut-official-cash-rate-again","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/163715\/","title":{"rendered":"International economists pick Reserve Bank will have to cut Official Cash Rate again"},"content":{"rendered":"The Kiwi dollar was more sensitive than peers to shifts in global risk appetite, BMI said.<\/p>\n
\u201cKey headwinds include persistent geopolitical uncertainty, a subdued domestic growth outlook, and, to a lesser extent, a more accommodative RBNZ.\u201d<\/p>\n
While annual Consumers Price Index inflation rose to the top of the 1-3% target band in the third quarter, core and non-tradeables inflation continued to moderate, BMI said.<\/p>\n
That was consistent with inflation returning to 2% by mid-2026.<\/p>\n
\u201cEconomic activity was weak through to mid-2025, with GDP contracting in [the second quarter], although near-term indicators point to a gradual recovery,\u201d BMI said.<\/p>\n
In a separate research note on New Zealand (also released today), BMI forecast modest real GDP growth of 0.5% in 2025 and a stronger 2.0% in 2026.<\/p>\n
Both forecasts were revised down from 1.2% and 2.7% respectively in September.<\/p>\n
\u201cWe maintain our view that New Zealand\u2019s real GDP growth will experience a modest acceleration in 2025. However, we now hold a less bullish view than in September, when our last economic review was released,\u201d BMI said.<\/p>\n
This revision reflected the fact that BMI\u2019s previous call was made before the release of New Zealand\u2019s weaker-than-expected second quarter GDP release, when the economy contracted by 0.9% (quarter on quarter).<\/p>\n
The revision to the 2026 growth forecast from 2.7% to 2%, reflected the fact that the economy was responding to monetary easing more slowly than anticipated.<\/p>\n
In 2026, BMI expects growth to pick up as further monetary easing, resilient exports and sectoral recovery support activity.<\/p>\n
\u201cThe Reserve Bank of New Zealand\u2019s rate cuts would continue to ease monetary policy conditions \u2013 even if most of the easing cycle was likely behind us,\u201d BMI said.<\/p>\n
That would support household spending and business investment.<\/p>\n
\u201cHowever, downside risks persist. An escalation in global trade tensions or new tariffs could weaken export performance, while a slower-than-expected recovery in mainland China \u2013 New Zealand\u2019s largest trading partner \u2013 would dampen agricultural demand.<\/p>\n
\u201cDomestically, persistent labour shortages and wage pressures could restrain productivity, and delays to infrastructure projects would reduce fiscal support,\u201d BMI said.<\/p>\n
\u201cAdditionally, if inflation proves sticky, the Reserve Bank may pause or reverse rate cuts, curbing the anticipated lift to consumption and investment.\u201d<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.<\/p>\n
Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"The Kiwi dollar was more sensitive than peers to shifts in global risk appetite, BMI said. \u201cKey headwinds…\n","protected":false},"author":2,"featured_media":163716,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[3225,6030,1643,16195,138,6932,3588,10666,127,8473,13488,219,305,12469,1019,5511,440,220,3025,111,139,69,5908,15407,19257,10665,107324,5662,61,6923,1533,102,9184,80],"class_list":["post-163715","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-according","tag-again","tag-bank","tag-bmi","tag-business","tag-cash","tag-cut","tag-cuts","tag-despite","tag-done","tag-economists","tag-economy","tag-have","tag-interest","tag-international","tag-just","tag-local","tag-markets","tag-most","tag-new-zealand","tag-newzealand","tag-nz","tag-official","tag-pick","tag-rate","tag-reserve","tag-singaporebased","tag-think","tag-to","tag-what","tag-will","tag-with","tag-yet","tag-zealand"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/163715","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=163715"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/163715\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/163716"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=163715"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=163715"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=163715"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}