Economists at the country's largest bank now see the Official Cash Rate (OCR) going to 2.5% before the end of the year - and they've cut their house price forecast.
ANZ chief economist Sharon Zollner said the ANZ economists had added "two more" OCR cuts to their forecasts - in August and October. Previously the ANZ economists had forecast an OCR-low of 3.0%.
The OCR is currently at 3.5% having been dropped from 5.5% since August of last year.
On the house price forecast, the ANZ economists have for some time been forecasting 6% growth for the full 2025 calendar year - but they've now trimmed this back to 4.5%.
Recent housing market data has shown a continued overhang of houses for sale on the market.
The economists have also revised down their GDP growth pick from 1.3% to 1.0% for 2025 and from 2.9% to 2.6% for 2026.
Zollner said recent economic data had on balance suggested that while the economic recovery is well under way, it is "looking a bit more stop-start than our current forecasts imply".
"In addition, persistent uncertainty on the global trade front and a darker and murkier outlook for global growth is likely to dampen investment and broader risk-taking to some extent," Zollner said.
On the housing market, Zollner said recovery is under way "though at a slower pace than previously expected".
The ANZ economists now think the economy "will require a bit more support from monetary policy to ensure that the recovery remains on track" and that medium-term inflation doesn’t undershoot the target.
"It’s early days, but we expect the RBNZ forecast revisions will have the same broad flavour in next month’s Monetary Policy Statement," Zollner said.
She said the risks are tilted towards the 100bp of OCR cuts the economists are forecasting arriving more quickly than a steady 25bp at each meeting.
"With inflation pressures looking contained the RBNZ is indeed, as they stated last week, in a good position to respond vigorously to downside risks should they manifest. The risk that the [NZ dollar] may hold up better than it has in previous global ructions (should the USD come under pressure) also implies a risk that the OCR will need to do more work."
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