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12 Mar 2014
Flash: RBNZ expected to hike rates today – Westpac
FXStreet (Edinburgh) - Imre Speizer, Director, NZ Rates Strategy at Westpac, sees a rate hike by the RBNZ in today’s meeting.
Key Quotes
“In Thursday’s Monetary Policy Statement (MPS) the RBNZ will finally begin the journey back to more normal interest rate settings, after several years of economic underperformance, false starts and major setbacks. With the RBNZ having stated in January that this adjustment process will begin “soon”, market participants are now widely anticipating an increase in the Official Cash Rate (OCR) from 2.50% to 2.75%”.
“While the RBNZ’s projected path of interest rate hikes could still reasonably be described as ‘gradual’ compared to past tightening cycles, it won’t leave much room for dallying – consecutive hikes at some stage are a given, and in our view are more likely to occur up front”.
“Our central scenario (to which we assign a 70% chance) sees the RBNZ noting stronger economic growth, inflation and inflation expectations, only partly offset by a higher exchange rate and housing slowdown. The 90-day track would be elevated by 25bp. 2yr swap rates would only rise by 2bp in response, since this scenario is widely expected”.
Key Quotes
“In Thursday’s Monetary Policy Statement (MPS) the RBNZ will finally begin the journey back to more normal interest rate settings, after several years of economic underperformance, false starts and major setbacks. With the RBNZ having stated in January that this adjustment process will begin “soon”, market participants are now widely anticipating an increase in the Official Cash Rate (OCR) from 2.50% to 2.75%”.
“While the RBNZ’s projected path of interest rate hikes could still reasonably be described as ‘gradual’ compared to past tightening cycles, it won’t leave much room for dallying – consecutive hikes at some stage are a given, and in our view are more likely to occur up front”.
“Our central scenario (to which we assign a 70% chance) sees the RBNZ noting stronger economic growth, inflation and inflation expectations, only partly offset by a higher exchange rate and housing slowdown. The 90-day track would be elevated by 25bp. 2yr swap rates would only rise by 2bp in response, since this scenario is widely expected”.