The Reserve Bank of New Zealand announcement is at 2000GMT Wednesday

  • That's 9 am local time in NZ on Thursday
  • 5 minutes later Governor Wheeler will speak at a news conference
  • Later (2310GMT) Wheeler will speak again, answering questions at a parliament committee

The announcement will be accompanied by the release of the RBNZ"s Monetary Policy Statement (MPS). The MPS is published quarterly. its an informative document, and is requitred to set out:

  • how the Reserve Bank proposes to achieve its targets;
  • how it proposes to formulate and implement monetary policy during the next five years; and
  • how monetary policy has been implemented since the last Monetary Policy Statement.

What to expect? Most analysts are expecting the RBNZ to remain on hold at this meeting:

  • The latest Reuters polls has 17 of 21 economists expect on hold ... 4 expect a cut by 25 bp

It is worth noting that while analyst expectations are skewed heavily to no change in the OCR, market pricing is not quite so clear cut. The latest OIS pricing is at 28% ... which is hardly line ball, but worthy of your attention.

What is expected to change, though, is that the RBNZ will move to a more explicit easing bias. and signal there are cuts to come later this year. In the most recent statement the RBNZ said "further policy easing may be required", this is likely to be strengthened to something along the lines of "some further reduction in the OCR seems likely" (words from the October 2015 statement).

The Reserve Bank of New Zealand is looking at

  • Very soft inflation
  • A difficult outlook for exporters, dairy price falls have continued (notwithstanding the latest small gain at auction)
  • Risks from offshore - China and EM risks, global growth is underwhelming and sentiment is poor

More positively, though:

  • The local economy is performing relatively well and is showing signs of continuing to do so
  • The housing market remains strong
  • Population growth continues strong

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Bottom line - no change in the OCR is expected tomorrow, but a more strongly worded easing bias and then cuts in following months,

I would caution, though, that the risk is for a 'surprise' cut sooner, i.e tomorrow. For the NZD a surprise cut is likely to knock at least a cent off it: