FXStreet (Bali) – In New Zealand, headline confidence fell further, and as a consequence, Philip Borkin, Senior Economist at ANZ, still expects further monetary policy easing by the RBNZ, although it might not be delivered at the earliest opportunity, Borkin notes.
Key Quotes
“Unsurprisingly, headline confidence fell further. A seasonally adjusted 9% of firms are pessimistic about the economy’s prospects over the year ahead, down from a net 7% who were optimistic in the June quarter survey. This is the lowest level of confidence since March 2011, but is still well above the depths seen during the Global Financial Crisis.”
“But activity indicators held up reasonably well. Firms’ experienced domestic trading activity rose from a net 10% to 12%, while expected conditions lifted to a net +17% from +13.”
“Broadly mirroring the themes contained within our own Business Outlook survey, today’s QSBO was certainly consistent with a softer economy, but not one that was capitulating. In fact, if anything, the activity indicators within the survey were a touch better than expected highlighting a decent backbone.”
“However, inflation nuances remained soft, with a margin squeeze story apparent. This will keep the RBNZ focused on medium-term inflation trends and sees the balance of risk still skewed towards additional monetary policy easing. But at this stage, we see little in this survey to alter our core views of the economy.”
“Further monetary policy easing is likely but we are not convinced another cut will be delivered at the earliest opportunity (this month’s OCR Review).”
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