From TD Securities economist Annette Beacher, in a client note after the RBNZ decision:
- “RBNZ is set to keep the tightening cycle going despite the slump in commodity prices and the September election.”
- Said the NZD jumped “when we all realized that there was NO tempering of the bank bill profile, suggesting that no pause lies ahead at all”
- No sign of reluctance to continue the tightening cycle … we “combed over (the statement) for signs of any reluctance to continue the tightening cycle with the same intensity but it just wasn’t there”
- Expect another 25bps hike in July, then again r in December
- So, OCR to 3.75% by the end of this year
- “We still allow for a pause during the run-up to the September 20 election and we still project the OCR to be a neutral 4.5% by September 2015. This relatively aggressive tightening cycle is perhaps prompted by the news that households are increasingly locking in fixed-rate mortgages so better to move early”
