New Zealand - Hinting that rates may rise later

While leaving interest rates at 1.75% at the policy meeting on Thursday 9^th August, the Reserve Bank of New Zealand will probably acknowledge the recent softening in activity by revising down the GDP growth forecasts published in the accompanying Monetary Policy Statement and perhaps even pushing back the timing of when it expects to raise interest rates. Our view that rates won’t be raised until mid-2020 assumes a later lift-off than the markets and explains why we think the dollar may weaken from US$0.68 now to US$0.65 this year.