Wednesday, 15th May, 2019

As we expected the RBNZ cut the OCR to 1.5% last Wednesday. Indeed, the Monetary Policy Committee – in its inaugural OCR decision – reached a consensus on implementing a cut. But what was not quite as clear was the path forward. The RBNZ interest rate forecasts showed an easing bias, but at the same time, it’s clear that incoming data over coming months will dictate whether or not the Bank cuts again this year.

In contrast, President Trump announced a tariff increase to 25% on $200bn worth of Chinese imports (we discuss this in the Chart of the Week below). Looking at the week ahead, there are mostly minor local data scheduled. Across the Tasman, April employment data are due and this has the potential to influence the prospects for an RBA cut. Otherwise, markets will remain squarely focused on US-China trade headlines.