Dominick Stephens, a chief economist at Westpac, thinks next week’s OCR decision of the Reserve Bank of New Zealand (RBNZ) is an incredibly close call. He sees a 55% chance of an OCR cut, and a 45% chance of an on hold decision.

• GDP growth has fallen well short of the RBNZ’s lofty expectations. If the economy stays slow, inflation will be stuck below 2%.
• Regardless of the OCR decision, we expect the RBNZ to drop its OCR forecast to around 1.4%.
• In the event of a cut, the RBNZ will leave the door open to further cuts without making promises. – If the OCR is kept on hold, we expect the RBNZ will strengthen its easing bias.