A surprise decision from the Reserve Bank of New Zealand on Wednesday:

Rate hike expectations shifted forward in response:

ICYMI, BNZ have also moved their cash rate hike forecast to the August meeting.

Given today's signals from the RBNZ we formally shift to an August start in the process (from November previously). That's not to say a hike next month is a done deal. However, August sits more comfortably with us given;

(In brief) BNZ then cite:

  • our core view that the Bank should (rather than would) already be in the process of exiting its emergency setting on the OCR.
  • our expectation that Friday's Q2 CPI will highlight ... core inflation more surely running consistent with the Bank's inflation mandate
  • our belief that the June quarter labour market data will prove stronger than the May Monetary Policy Statement (MPS) figured on

August 18 is very much 'live':

A surprise decision from the Reserve Bank of New Zealand on Wednesday: