Central Banks: BoC and RBNZ in focus – Westpac

By FXStreet Analysts at Westpac explained that a steady hand is also expected from the Bank of Canada with rates at 0.5%.

Key Quotes:

“The BoC likely sticks to its neutral script. Governor Poloz is likely to be cautiously optimistic given energy prices have based, US growth has picked up and Q4 Canadian GDP was stronger than expected. The 22 Mar federal budget could reveal more accommodative fiscal settings, another reason for Poloz to sit on the sidelines.

The RBNZ policy decision is announced 3pm NY/7am Syd/9am NZ. Most forecasters see the OCR remaining at 2.5%. While Westpac is expecting an on-hold decision, we place a 30% chance of a 25bp cut and market pricing is for a similar probability.

While the NZ economy is ticking over nicely, inflation pressures are very subdued, and a sustained return to the midpoint of the inflation target is looking increasingly unlikely under current policy settings. However, the timing of interest rate cuts remains uncertain.

While a case can be made for immediate action, we think the RBNZ’s concerns about the housing market and its comfort with the rate of core inflation will stay its hand for now. The MPS though should show the interest rate forecast lowered …read more

Source:: FX Street