Central Banks

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.

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