Market Outlook: HSBC Forecasts RBNZ May Cut Rates by 50 Basis Points Next Week

HSBC forecasts that the Reserve Bank of New Zealand (RBNZ) may implement a 50 basis point interest rate cut next week. According to HSBC economist Paul Bloxham, since New Zealand's current interest rate remains well above neutral levels, further easing by the RBNZ is likely.

Bloxham stated, "In the monetary policy announcement in August, the RBNZ indicated a neutral estimate of approximately 3.4% compared to the current rate of 4.75%. Additionally, the RBNZ meeting following next week will be three months later. Therefore, the RBNZ board may consider a reduction of 25, 50, or 75 basis points on November 27, but it is more likely to settle on a move of 50 basis points." He noted that this would balance the risks to both growth and inflation.

The economist also added that the pace of easing by the RBNZ could slow throughout 2025, with the economy expected to continue recovering at a rate of 3.25% by the end of that year. The RBNZ interest rate meeting is scheduled for November 27.