18 Jul 2014
RBNZ to hike once more and then pause - Commerzbank
FXStreet (Córdoba) - Elisabeth Andreae, analyst at Commerzbank says they they expect the RBNZ to hike rates once more next week and then pause, as the RBNZ still clearly assesses the NZD as overvalued.
Key Quotes
“The RBNZ has raised its key rate three times since March to counteract the threat of an
overheating economy and the resulting inflationary risks. This has had an effect. Leading
indicators have fallen significantly of late. Also, inflation rates in Q2 fell short of the RBNZ’s expectations. And furthermore, prices for dairy products, which are important in New Zealand, have continued to decline”.
“All this has recently put a notable damper on rate hike expectations on the markets and stopped the appreciation of the currency”.
“In light of recent data, and with the RBNZ still clearly assessing the NZD as overvalued, the bank will probably adjust its tightening course”.
“We expect it to raise its key rate from 3.25% to 3.5% next week and then pause”.
Key Quotes
“The RBNZ has raised its key rate three times since March to counteract the threat of an
overheating economy and the resulting inflationary risks. This has had an effect. Leading
indicators have fallen significantly of late. Also, inflation rates in Q2 fell short of the RBNZ’s expectations. And furthermore, prices for dairy products, which are important in New Zealand, have continued to decline”.
“All this has recently put a notable damper on rate hike expectations on the markets and stopped the appreciation of the currency”.
“In light of recent data, and with the RBNZ still clearly assessing the NZD as overvalued, the bank will probably adjust its tightening course”.
“We expect it to raise its key rate from 3.25% to 3.5% next week and then pause”.