RBNZ: Market pricing 66% chance of OCR cut in November – Westpac

Imre Speizer, Research Analyst at Westpac, notes that the market pricing for a November OCR cut has eased over the past two weeks, from 72% to 66%.

Key Quotes

“The rise in global bond yields, fall in the NZD exchange rate, and NZ business confidence running at a multi-year high have all contributed to the reduced pricing. However, markets are reluctant to price too much out given the RBNZ in September explicitly restated its intention to ease again.

The strong business sentiment surveys also confirmed an absence of inflationary pressures, and that will be of concern to the RBNZ. There’s also the matter of dairy prices stalling, with the future trajectory from here debatable.

We expect the RBNZ will choose the November meeting to ease, not least because the gap between the November and February meetings (under the new schedule) is unusually large. After that, it should remain on hold at 1.75% for some time. Our view is pretty much what the market has now priced in for future meeting dates.”