The Reserve Bank of New Zealand is mandated to hold prices stable and ensure full employment. Such requirements are formally written into law governing operation of the bBan.
Last week, we had the latest CPI data, surging:
- Westpac forecast 3 rate hikes from the RBNZ by the end of this year
- RBNZ's core inflation measure for Q2 2.2% (prior 2.0%)
- ANZ on the RBNZ cash rate hike cycle ahead, on track for 1.75% by the end of 2022
- NZ CPI Q2 2021 1.3% q/q (vs. expected 0.8%) and 3.3% y/y (vs. expected 2.8%)
Market pricing has an August hike baked in,a and as you can see above further seem on the cards also.
Westpac, in addition to seeking 3 hikes of 25bps each time by the end of this year see a higher NZD/USD:
- NZ economy is expected to remain buoyant over the remainder of this year
- the RBNZ has signalled rate hikes
- NZ-US yield spreads are rising
- commodity prices have a positive outlook
- These fundamentals should provide support for NZD/USD, our year-end forecast 0.74
RBNZ meetings ahead for 2021:
