RBNZ: Market pricing for rate hike by end- 2017, back to about 35-40% - Westpac

Sean Callow, Research Analyst at Westpac, notes that the market pricing for a RBNZ rate hike by end- 2017 had been 100% in the early weeks of 2017 but is now back to about 35-40% chance.

Key Quotes

“At its March interest rate decision, the RBNZ kept the OCR on hold at 1.75% as fully expected.”

“The statement was received very calmly, as it showed little change from February. Our NZ Economics team notes the RBNZ expects the cash rate to remain low for a considerable period (the forecasts published in February suggested no change until late 2018).”

“The outlook for the New Zealand economy remains positive, but the risks around the global environment are seen to the downside. RBNZ Governor Wheeler has expressed his concerns about US president Trump’s policy agenda and the potential impact on New Zealand. The RBNZ also highlighted significant excess capacity in the global economy and low core inflation.”

“The RBNZ remained positive on the domestic economy, playing down the slowdown in Q4 GDP growth.”