Yesterday's data published by the RBNZ:
- 2 year expectation (3.29%) is unlikely to cause too much further angst at the RBNZ.
- The market’s OCR expectations were pared back yesterday after the RBNZ’s 2-year inflation expectations series showed a smaller jump than seemingly feared. 2-year ahead inflation expectations nudged up to 3.29% in Q2 from 3.27% previously, something of a surprise given the series is usually highly correlated to movements in headline inflation. 5-year inflation expectations increased to 2.42%, from 2.30% previously, a new high for this now five-year old series.
- Market pricing for the peak in the OCR has come down over the past week from around 4.25% to around 3.85% now. The market, which not so long ago was pricing a small chance of a 75bps RBNZ hike later this month, is now pricing around an 85% chance of a 50bps hike at the May meeting.
NZD/USD is moving pretty much in line with global markets for now: