RBNZ: "We doubt the market will fully embrace the RBNZ’s neutral tone" - ANZ

Analysts at ANZ noted today's RBNZ and offered a bullish outlook from the market for the bird.

Key Quotes:

"The RBNZ maintained the OCR at 1.75% as expected, with the tone neutral and reasonably cautious – in fact we’d say as cautious as it could possibly be, given the growth backdrop. A previous soft easing bias was removed, but the message is that the OCR is not going anywhere in a hurry. That is entirely appropriate in our view.

In many ways, the statement was very two-handed. Domestic economic strength, a higher inflation starting point and better global prospects are acknowledged, but that is balanced against NZD strength, ongoing global risks, caution over the outlook for dairy and a lower inflation forecast.

While the lack of a confirmed explicit tightening bias will disappoint hawks, and should be bullish for short-end rates, we doubt the market will fully embrace the RBNZ’s neutral tone, and expect dips to be fairly shallow. Given rising global rates, the curve should steepen."