RBNZ expectations: possible cut? – Westpac

By FXStreet FXStreet (Guatemala) – Imre Speizer, analyst at Westpac said that they expect the RBNZ to hold the OCR at 2.75% at Thursday’s OCR Review, but to retain its easing bias. NZ swap rates and the NZD could rise slightly in response.

Key Quotes:

“Among a poll of 18 economists, only 4 are predicting a rate cut, the remainder expecting an on hold decision. Market pricing agrees, with only a 16% chance of a cut priced in. We lay out three possible scenarios:

(a) neutral from the market’s viewpoint (70% chance) – on hold at 2.75% but signalling further easing is likely. The easing bias will be watered down slightly in light of the net positive developments since September (housing and dairy up, but exchange rate stronger). The policy sentence would read something like: “Some further easing in the OCR seems likely but this will continue to depend on the emerging flow of economic data.” In response, the 2yr swap rate would rise by around 2bp and NZD/USD would rise by around 1/4 cent.

(b) hawkish (20%) – on hold at 2.75% and significantly downgrading the easing bias. “Some further easing in the OCR is possible but….” The 2yr swap rate would rise by 10bp …read more

Source:: FX Street