No surprise that a rate hike is expected again tomorrow from the RBNZ, they’ve been telegraphing their moves clearly. The previous two hikes (at the previous two meetings) have been unanimously expected, the one tomorrow is maybe not quite so certain, but is still odds-on. OIS pricing is currently at 96% for a 25 basis point hike.
- The data flow from NZ hasn’t been as positive as expected recently, but is more towards ‘stabilising’ than showing any reversal
- Nevertheless, dairy prices have softened, inflation is not seen as a big threat, house price momentum has slowed
- But the impact on the RBNZ tightening cycle is likely to be felt further out down the track, not tomorrow
- As I type this, the NZD is grinding its way higher, just around the day’s highs now at 0.8540-ish
Tomorrow’s RBNZ meeting will include in the announcement:
- A rate hike of 25 basis points to 3.25%
- A full Monetary Policy Statement, with updated forecasts and a press conference to follow.
