Coming up next week - Reserve Bank of New Zealand monetary policy meeting - preview

An early what to expect from the RBNZ next week, March 27 at 0100GMT

Via Barclays

• We think the argument for looser policy is building and the RBNZ may struggle to maintain its neutral policy tone at its 27 March meeting, encouraging markets to price further easing and sell NZD before then.
• The output gap likely became negative in H2 18 and headline (1.9% y/y) and core inflation (1.7%) sit below the 2% midpoint of the RBNZ's 1-3% inflation target band.
• We are skeptical of the RBNZ's view that New Zealand activity will pick up sufficiently (i.e., to 3% y/y) such that an increasingly positive output gap offsets concern that falling headline inflation (likely to bottom at 1.2% y/y in Q3) will lower already-subdued inflation expectations (one-year ahead expectations were 1.8% y/y in Q1).

(note, despite this being issued pre the Q4 GDP data release, Barclays were spot on with their 0.6% forecast for that data point)

Also:

• You are cordially invited to hear RBNZ Governor Orr speaking on March 29 (for real!)

V. old pic!