RBNZ: Zero chance of a change in the OCR during the next four meetings - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the market pricing for the RBNZ assigns zero chance of a change in the OCR during the next four meetings.

Key Quotes

“However, beyond that, there increasing probabilities of rate hikes priced in, with a 70% chance by Nov 2017 and 100% by Feb 2018.”

“Our own macroeconomic forecasts have the RBNZ remaining on hold for the next two years but we understand the rationale for markets wanting to be well ahead of the game. If inflation and inflation expectation data keep unfolding in an upward direction during the months ahead, OIS pricing will only move further in that direction.”

“There is no RBNZ meeting in either Dec or Jan, with the next meeting in Feb being a full-blown MPS. Although there is no chance of an OCR move, we will be interested in any shift in the RBNZ’s inflation and OCR forecasts in response to the stronger economy and higher oil prices, for example.”