RBNZ’s decsion to leave its official cash rate unchanged at 3.5% came as no surprise. The c.bank revised up its forecast for GDP growth in the twelve months from April 2015 to March 2016, from the 3.4% figure published in Dec to 3.6%. Capital Economics notes in a report on Thursday:
- The revision in forecast was partly to take account of downward revisions to historical GDP data and partly in anticipation of a boost to spending resulting from the slump in oil prices.
- We think this forecast will prove too optimistic and, accordingly, continue to expect the cash rate to be cut to 3.0% by the end of the year, from 3.5% now.
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