There's an unusual degree of disagreement among the panel of experts the NZIER regularly consults for opinions on what will happen to the Official Cash Rate.
The Reserve Bank's Monetary Policy Committee is set to have its latest review of the OCR, currently at 5.25%, on Wednesday, October 9.
The nine members of NZIER's 'Shadow Board' all reckon there will be a cut. But five of them say it'll be a 50 basis point cut and four say it will be 25.
Bank economists have all coalesced behind a 50-point pick over the last week - and there's three of them on the nine-strong panel. But outside of the world of the economists there's definitely some different views of what's appropriate in terms of the speed in which the RBNZ - having started to cut rates in August - conducts this 'easing cycle'.
NZIER senior economist Ting Huang said those 'Shadow Board' members who recommended a 50 basis-point cut were concerned about the continued weakness and increased excess capacity in the New Zealand economy.
"They also cited the easing in headline inflation and inflation expectations, which warrant a less-restrictive interest rate setting.
"The rest of the members viewed a 25 basis-point cut is more appropriate for now, given some upside risks in non-tradable inflation remain," she said.
Very firmly in the 50-point camp is shadow board member Jarrod Kerr, Kiwibank chief economist.
"The decision to cut rates was made in August. It is now a decision around the pace and magnitude of cuts," he said.
"The discussion should involve a 50bp move in both October and November. Policy works with a long lag, and the economy needs stimulus. The recession is ongoing and is coming up two years. Interest rates are clearly restrictive, and returning to more neutral levels requires at least 250bps."
In the corner for 25 points is Viv Hall, professor at Victoria University of Wellington, who said a further 25bp cut in the OCR is justified now.
"But the path of further cuts must be data dependent. Some upside risks remain with non- tradables/underlying inflation and with cost pressures.
Arthur Grimes of Motu Research and associate professor at Victoria University of Wellington said a "gradual reduction" of the OCR over the next 12 months is appropriate based on the current economic outlook.
"Naturally, this path could change depending on shocks to the economy."
Dennis Wesselbaum, associate professor at University of Otago said GDP numbers (particularly manufacturing, trade and transport) looked weak, and jobseeker support is increasing.
"Inflation, on the other hand, is too high and, according to GDPlive, appears not to be falling as fast any more. A small cut (25bp) seems to be a good compromise."
Kerry Gupwell chief executive of environmental planning and design consultancy Boffa Miskell said he thought there will be a reduction of 25 basis points.
"But I do think there is a case for a more aggressive reduction given the continued sluggish growth."
Kelly Eckhold, Westpac chief economist said headline inflation and expectations no longer look to justify very tight interest rate settings.
"A strong case can be made to quickly adjust interest rates towards neutral levels to stabilise output and employment. Given the long gap between [RBNZ OCR] meetings from November to February, a strong case exists to move the OCR down more quickly before Christmas."
Regarding where the 'Shadow Board' sees the OCR in 12 months' time, NZIER's Huang said they thought the RBNZ should continue with the easing cycle over the coming year, with the majority picking an OCR ranging between 3.5% and 4.5%.
"Some members recommended a gradual easing in the OCR, reflecting their views that the RBNZ should take a more cautious and data-dependent approach. Other members viewed that the RBNZ should ease the OCR more rapidly. They considered that the weak economic conditions suggest the need for more stimulus over the coming year," Huang said.
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