RBNZ: Market pricing has been fairly stable - Westpac

Market pricing for the RBNZ has been fairly stable as the last significant shift in pricing followed the May MPS, when the RBNZ surprised the market with its pessimistic outlooks for economic growth and inflation, according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“Pricing lurched from March 2018 to August 2018, and there it has remained since.”

“Next week’s OCR Review comprises only a brief one-page statement, but that should be ample space for the RBNZ to articulate its lengthy on-hold outlook. The recent GDP data disappointment, stronger NZD TWI, and cooler housing market; are balanced by stronger terms of trade and fiscal impulse, but still allow for a fairly cautious tone to be struck overall.”

“Indeed, if the RBNZ concludes with something along the lines of “there is an equal chance of easing or tightening”, then swap rates could fall in response. That is because the RBNZ’s OCR track does have an eventual tightening, and the market has priced one by August 2018.”