The disconnect between market expectations for interest rate cuts and the Reserve Bank’s outlook will be back in the spotlight this week with the release of the latest Monetary Policy Statement (MPS). Economists warn that those looking for signs that rate cuts are creeping closer will probably be disappointed. “We expect the RBNZ to maintain its comment that ‘interest rates need to remain at a restrictive level for a sustained period’, essentially describing their OCR track. “We’ve all been conditioned over years to think that weak data means rate cuts will be delivered quickly, to get the economy out of an unintended hole. Thus, leaving November as the earliest kickoff date for rate cuts,” Kiwibank chief economist Jarrod Kerr said.
