RBNZ: Market pricing a rate hike in March 2018 - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that the NZ monetary policy Market pricing for a November OCR cut was proven correct and with the end of the easing cycle, the restless markets are now looking ahead to tightening.

Key Quotes

“There is now a 100% chance of a hike by March 2018 priced in, and 60% by November 2017. We disagree with such pricing and would be happy to fade any further moves in that direction, for example by receiving August 2017 meeting date OIS above 1.85%.”

“The RBNZ’s MPS yesterday cut the OCR from 2.0% to 1.75% as was widely expected. There was a surprise from the guidance, though, with the shift to a neutral bias (markets had expected mild easing bias to be retained). One could argue there is a glimmer of an easing bias implied by the OCR projection at 1.7%, but the narrative in the statement and the guidance language read more like a neutral bias.”