9 Dec 2014
RBNZ in focus this week for NZD/USD - Westpac
FXStreet (Guatemala) - Imre Speizer, chief analyst at Westpac Banking Corporation ABN explained that the main medium-term rationale is low inflation at the RBNZ.
“We forecast headline CPI to again be 1.0% yoy in the December quarter”.
“The RBNZ had forecast it to be 1.3% in both the September and December quarters, so it will be surprised by such an outcome. Further, it will be concerned the bottom of the 1.0%-3.0% policy target band is being threatened”.
“The sharp slide in oil prices, particularly since October, is a recent source of disinflationary pressure”.
“New Zealand petrol prices are now below $2 a litre for the first time in over two years, raising the possibility that headline CPI could fall below 1.0% in the next quarter or two. If this happens, then markets will probably start pricing in the possibility of OCR cuts – particularly now that rate cuts are looking more likely across the Tasman (following some very disappointing Australian GDP data, Westpac now expects two ‘insurance cuts’ from the RBA early next year)”.
“We forecast headline CPI to again be 1.0% yoy in the December quarter”.
“The RBNZ had forecast it to be 1.3% in both the September and December quarters, so it will be surprised by such an outcome. Further, it will be concerned the bottom of the 1.0%-3.0% policy target band is being threatened”.
“The sharp slide in oil prices, particularly since October, is a recent source of disinflationary pressure”.
“New Zealand petrol prices are now below $2 a litre for the first time in over two years, raising the possibility that headline CPI could fall below 1.0% in the next quarter or two. If this happens, then markets will probably start pricing in the possibility of OCR cuts – particularly now that rate cuts are looking more likely across the Tasman (following some very disappointing Australian GDP data, Westpac now expects two ‘insurance cuts’ from the RBA early next year)”.