RBNZ market pricing has firmed - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that the RBNZ market pricing has firmed during the past week, partly due to higher global yields, and partly due to the continuing stream of good NZ economic news.

Key Quotes

“The chance of a November cut has now fallen to 60%, from 5% a week ago. And beyond that, the chance of a 1.5% OCR is now seen a slim. The 22 September meeting is widely expected to be an on-hold affair, not least because the RBNZ has said it favours moving on MPS dates rather than interim meetings. However the announcement, in the form of a one-page press release, will not be entirely risk-free. There is a slight possibility the guidance sentence could be watered down from “...further easing will be likely.” to “...further easing may be likely.” If so, markets would sharply pare their expectations of another cut, and swap rates and the NZD would rise sharply.”