Low inflation and slowing growth will force the Reserve Bank to cut the official cash rate three more times by May, ANZ economists say.

"We now expect 25 basis point OCR cuts in November, February and May, taking the OCR to 0.25 per cent," ANZ chief economist Sharon Zollner wrote in research released this morning.

"We would not rule out another cut as soon as September, but it is not our
central view."

ANZ would also be reviewing its GDP forecasts, which will likely be revised down.

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Zollner and her team have had one of the more pessimistic outlooks on the economy and the monetary policy path for the past year.

So far that lack of confidence has proved well-founded.

Zollner cites seven reasons of the fresh call including the trend in business confidence surveys.

Both the ANZ Business Outlook and the BNZ-Business NZ PMI tell a story of very weak growth momentum in the second half of this year, she says.

That was inconsistent with the Reserve Bank's August MPS forecasts.

"There is not much reason for optimism about the outlook in the hard data either. The ANZ Truckometer Light Traffic Index is the most leading hard data we have, and it is still trending downward."

She also cites low inflation expectations, that the labour market will soften, global turmoil, Australian rate cuts, dairy sector concerns and proposed bank capital requirements (which could put upward pressure on retail rates).

Finance Minister Grant Robertson this week argued that New Zealand's economic fundamentals remain strong.

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Arguing against the need for emergency fiscal stimulus he said it was "important we don't talk ourselves into a kind of winter gloom."

We do have low public debt, surpluses out over the next four years and unemployment at an 11-year low, he said.

Commodity prices have also held relatively strong in the face of growing international trade tension.

"There's still strong growth in the economy it's just not at the levels we might have seen in recent years."

Zollner accepted that but side downside risks growing.

"One can argue – and indeed we have – that while downside risks are
accumulating, the growth fundamentals remain solid," she said.

"But the fact is, a continued slowdown over coming months, contrary to the RBNZ's
projections, is hiding in plain sight."

It wasn't all negative, she said.

"If the world keeps it together – and that is an increasingly optimistic "if", given
the relentlessly negative tone of most the global dataflow – the recent substantial easing of both interest rates and the exchange rate should support a decent pick-up in activity as we head into next year."

But the RBNZ needed the economy to "run hot" (above trend) to get inflation up towards the midpoint of the target, she said.

"Fat chance of that happening any time soon. Our GDP forecasts are under review."