Goldman Sachs on what to watch from the Reserve Bank of New Zealand.
GS expect no change to the cash rate (this is the consensus expectation also)
GS note that the backdrop heading into the meeting is:
- better-than-expected recent economic performance
- an improved near-term fiscal position
And that the focus of the statement is likely to be the Bank's updated path for the unemployment rate. GS expects forecasts will be revised lower, but still show a near-term "bump" in the path.
- see the RBNZ as likely to retain a dovish tone
- to maintain current guidance
GS note there is risk that the RBNZ update their path to show falls sustained declines in the unemployment rate, which could see the Bank pull forward its OCR track, which would deliver a hawkish signal to the market.
GS expect a rate hike from the Bank in Q1 of 2024. GS add they prefer NZD over AUD at present.
Market pricing at present is fully discounting an RBNZ hike by September 2022
- & 3 hikes priced through end-2023
Note that Wednesday's RBNZ decision will be accompanied by the latest quarterly Monetary policy Statement which will include the updated forecasts from the Bank.