Despite a holiday-shortened week in the US, most major US equity indices refreshed record highs, and US Treasury yields fell, along with the US dollar, which shed nearly -1.0% against major peers.
Cooling US economic conditions increasing odds of a September cut Minutes from the latest FOMC meeting last week stressed that Fed officials remain cautious and await further evidence of disinflation before having theconfidenceto begin easing policy. However, economic conditions display signs of cooling, and the pendulum appears to be swinging in favour of rate cuts.
Governor Adrian Orr also communicated that the central bank has ‘limited room for upside surprises in inflation’ and that there was a ‘real consideration’ regarding increasing the OCR at the meeting. Despite record migration levels for the country, New Zealand’s economy is combating paltry economic growth – the country recently exited a technical recession after GDP growth rose +0.
forecast. Heading into the event, analysts are not anticipating much change to the OCR or forward guidance due to the lack of economic data since the May meeting. The only data print of note was GDP highlighted above. This meeting also does not include updated economic forecasts . Therefore, the expectation is for the central bank to maintain its hawkish stance, which could underpin the New Zealand dollar .
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