RBNZ: Likely to be on hold this week – Westpac

Imre Speizer, Research Analyst at Westpac, notes that the RBNZ started easing in 2015, from an OCR of 3.5% to 2.25% after cutting in March 2016.

Key Quotes

“The main catalyst was surprisingly low inflation. Although the March MPS effectively signalled one more cut to 2.0%, since then the mix of developments in the economy has argued for an on-hold decision at the next meeting on 9 June.

Markets have priced only a 25% chance of a cut then, but have fully priced one by year end. We expect the RBNZ to cut in August, which would be a surprise to markets and push the NZD lower.”