New Zealand - 0.5% cut likely next step towards a new record low of 2.0%

In a change to our previous forecast, we now expect that the Reserve Bank of New Zealand (RBNZ) will cut interest rates by 0.5%, to 2.75%, at the policy meeting scheduled for Thursday 23rd July and that rates will be cut further to 2.0% by the end of the year. We previously thought that interest rates would be reduced more gradually to a low of 2.75%. If our new forecasts are right, then the New Zealand dollar could eventually weaken from US$0.65 now to around US$0.55.