The October official cash rate review will be on the 25th October.
The main points that will be driving RBNZ policy are:
- Strong economic growth (including revisions) in the June year.
- The surprising strength in the export industry, even before the TOT shock has fully eventuated
- A weak CPI reading, however many of the shocks driving down the number where one-off and so will be over-looked
- Credit market uncertainty and the volatility of the dollar
- Weakness in the housing market – Potential weakness in domestic demand
It seems more than likely that the RBNZ will keep rates steady. Any cuts would be irresponsible in the current climate, while a rate rise would seem heavy-handed given weakness in some domestic indicators. The probability of a hike is greater than the probability of a cut, given underlying inflationary pressure.