RBNZ to cut rates further

Today's NZ labour market data was a little softer than markets expected. After the data was released the NZD dropped by 25 points, while the 2-year swap rate fell 1 basis point.

"Today's data reinforces the expectations that the RBNZ will need to cut the OCR to 2.0%. The headwinds for growth are building, and underlying inflation remains subdued", says Westpac.

Against this backdrop, it is expected that the economy is going to need a significant shot in the arm to boost activity and inflation.