The Reserve Bank of New Zealand used its unusual inter-meeting “economic update” to all-but guarantee that it will cut rates from 2.25% to 2.00% at the meeting on 11 August and that it wants the dollar to weaken substantially. To achieve the latter, we suspect the Bank will have to reduce rates below 2.0%. In a change to our forecast, we now expect rates to fall to at least 1.5%.
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