RBNZ to cut OCR again in September

The Reserve Bank Governor Graeme Wheeler speech largely reinforced the message of last week's OCR review statement, which revealed a very cautious approach to the recent softening in New Zealand's economic conditions. 

"The RBNZ is prepared to cut the OCR again in September but seems to be on the fence about a further cut this year, which is more or less where market pricing currently stands", says Westpac.

The RBNZ remains reasonably positive on the domestic economy. However, a full review of its forecasts is pending at the September Monetary Policy Statement. The plunge in world dairy prices is clearly a concern, and the OCR cuts to date were aimed at providing a buffer against this shock. 

But overall, the RBNZ sees growth running just "a little below trend", supported by easier financial conditions, high net migration, growth in construction and strength in the services sector.