A preview of the Reserve Bank of New Zealand policy decision due 05 April 2023 at 2pm New Zealand time
- 0200 GMT
- 10pm US Eastern time
Via ANZ, in brief:
- We expect the RBNZ will raise the OCR 25bp to 5.00%, and see the skew of risks as favouring a 50bp hike over a pause.
- Data flow since the February MPS has not convincingly tilted things in either direction. Yes, Q4 GDP was much weaker than the RBNZ’s forecast, but given biting capacity constraints and post-COVID noise, we’re not convinced weak Q4 growth can be teed up to softening demand alone – particularly given timely indicators such as the PMI, PSI, and ANZ Business Outlook have improved since then.
- However, the elephant in the room is of course the turmoil in global markets, kicked off by the abrupt demise of Silicon Valley Bank and the takeover of Credit Suisse. Global financial sector wobbles suggest a degree of caution is appropriate, which the RBNZ can now afford given they are fairly confident the OCR is in contractionary territory. But if global financial wobbles resolve without significant economy-wide impacts, as our forecast assume, the RBNZ will still have a very sizable inflation problem on its hands once the dust has settled.
- we think a 25bp hike strikes the right balance. Further, if the wheels stay on until the May MPS, then it looks like another 25bp hike will be warranted then too
RBNZ Governor Orr
