Westpac has made a substantial change to its interest rate forecasts in its just released Economic Overview. Previously it said that a slowing economy would warrant further OCR cuts into 2018 and 2019.
"However, with our economic forecasts now evolving towards stronger growth for longer, we have decided to remove those additional cuts from the forecast. We still anticipate a slower pace of growth towards the end of the decade, as the Canterbury quake rebuild winds down and the construction pulse elsewhere peaks.
"And without that additional easing, our forecasts suggest that inflation is more likely to linger in the lower half of the inflation target. But that in itself would probably not be enough to spur the RBNZ back into action."
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