Following the most recent business survey done by the banks, it seems that their economists are now taking a step back on their earlier prediction on the OCR. With another announcement due later this month, it appears that the experts are now predicting for the OCR to remain as is.
Westpac's economist, Dominick Stephens expects the chances of a November cut to be 50/50 with the OCR still to drop to 0.75% but not till February 2020. There's likely to be more uncertainty in the global market, especially in the US by February as the presidential election race heats up.
ANZ's economist, Sharon Zollner, gave us her thoughts on the result of the ANZ Business Outlook survey, saying that the result was a mixed bag. It seems that export and employment intentions may have continued to drop but the price, profit and construction intentions have increased. ANZ have viewed this mixture in results as a start and a sign that things are beginning to change.
Our view is that a 0.25% cut is still likely to happen this month. Yes, price and profit intentions would have increased as we go into the Christmas period where we naturally see a rise in economic activity in consumer spending, but this is only a short period. By the RBNZ cutting the OCR now, we may see a more considerable increase in activity over the next couple of months, which will hopefully give firms more encouragement and a positive outlook going into the new year.
