ANZ saying the probability of a negative OCR from the RBNZ is getting higher
Summary of ANZ NZ economist note:
- Downside risks to our forecasts are manifesting with the detection of community transmission of COVID-19 on our shores. It’s too soon to say what the impact of this will be; uncertainty is immense. But data will be volatile for longer and there will be clear output losses.
- The RBNZ expanded the LSAP programme (QE) to $100bn, exceeding our top-of-market expectation of $90bn. They also expressed a preference for a negative OCR and funding for lending programme as the next cabs off the rank after the LSAP, with the odds of more being needed rapidly increasing.
- The RBNZ’s dovishness will weigh on the yield curve and NZD in coming weeks, helping to support the economy through the uncertain time ahead.