- Goldman Sachs suggests the RBNZ could opt for a 75bps rate cut, surpassing market expectations of 50bps.
- Despite the dovish outlook, the NZD’s downside may be limited by already bearish market positioning, with weak economic fundamentals supporting an aggressive easing cycle.
Goldman Sachs suggests the Reserve Bank of New Zealand (RBNZ) may pursue a larger-than-expected rate cut next week, floating the possibility of a 75-basis-point reduction—beyond the 50-basis-point consensus among market participants.
Goldman argues that weak economic fundamentals, including soft labor market data, lend weight to a more aggressive easing cycle by the central bank.
Although, despite the dovish outlook, the downside for the New Zealand dollar could be capped by bearish sentiment already priced into the market with the NZD/USD trading near a 12-month low.
Short-term bullish targets around 0.5890–0.5900 might offer upside targets. While the pair appears oversold, further declines remain on the table. The November 2023 lows could come into view if the RBNZ opts for an outsized 75-basis-point cut.
