RBNZ will flat-line its OCR track - ANZ

New Zealand’s short-end interest rates are back to within a few basis points of the year’s lows ahead of this week’s Reserve Bank MPS and analysts at ANZ believe that’s completely justified given their expectation that the Bank will flat-line its OCR track and given the overall inflation/currency backdrop.

Key Quotes

“We also see scope for further downside, but the market is likely to be sluggish in the absence of a full-blown shift to an easing bias; which seems a bridge too far at this point. Global long-end rates remain range bound and while we expect key rates like the US 10-year bond yield to be mildly higher by year end, we see limited scope for a material rise near term. The prospect of ongoing spread compression will cap local long-end rates in any case. A lower short end and higher US rates post last week’s data has steepened the curve, but lower neutral rates suggest flatter curves than those seen in earlier cycles.”