The RBNZ is widely expected to keep the official cash rate on hold this week, amid high domestic inflation and uncertainty in next week’s Budget.
The NZ Institute of Economic Research’s shadow board had consensus that inflation was continuing to ease, however, sticky domestic inflation was still a concern.
One member thought the coming Budget on May 30 was also a reason to keep the OCR on hold at 5.5% on Wednesday.
The shadow board members suggested a “cautious approach” was needed when lowering the OCR, because of upside inflation risks.
“Overall, this is broadly consistent with our view that the RBNZ should start reducing the OCR from mid-2025,” said the NZIER.