• Q2 inflation surprises the RBNZ to the downside again, with annual CPI inflation down to 3.3%, its lowest since mid-2021. Highly restrictive OCR settings are generating significant traction. • Non-tradable inflation has been slower to cool but this is partly reflective of cost driven influences that monetary policy should seek to look through. Stripping out some of these cost increases suggests that annual CPI inflation is already well below 3% and is rapidly cooling. • Today’s data tilts the risks towards earlier and larger OCR cuts. All remaining OCR decisions over 2024 are effectively ‘live’. In our view a 25bp OCR cut in November looks to be the bare minimum of what the RBNZ will need to deliver over 2024.
View of ASB