Analysts at ANZ point out that the New Zealand economy has been losing steam for a while now and think that this process has a little further to run.

“There are enough positive growth drivers out there to put a floor under the slowdown by year end, and support a gradual acceleration in growth thereafter. One of these bright spots is the additional monetary stimulus provided by the RBNZ when it cut the OCR in May. While lower interest rates (and the recent depreciation of the NZD) will support growth, we think a little more stimulus will be required to see inflation lift sustainably to the RBNZ’s target mid-point. We’ve pencilled in another 25bp cut for November with a follow up move in February. However, the global data has turned a bit patchy of late. A materialisation of global risks into tangible consequences (eg for commodity prices) would see us bring forward our expectation for the timing of the next OCR cut.”