22 Jul 2014
RBNZ to hike rates but watch for hints of a pause - RBS
FXStreet (Bali) - Greg Gibbs, FX Strategist at RBS, expects the RBNZ to hike rates by 25bp to 3.5% this week, also pointing that it may decide to int for a pause for the remaining of the year.
Key Quotes
"The RBNZ is likely to hike an additional 25bp this week so as not to confuse the market that largely expects a hike and discourage any back-sliding in two and three year mortgage rates."
"However, it may decide to hint at a pause after significant rate rises this year and a stronger NZD. If it references the currency in this way (linking it to a lower rates profile) it may cause a modest further weakening in the NZD."
"It is possible that they pause from tightening this week although we think this is unlikely. The market is already pricing rates largely on hold (after a hike this week) until Q1 next year. As such, there is limited scope for rates to fall."
Key Quotes
"The RBNZ is likely to hike an additional 25bp this week so as not to confuse the market that largely expects a hike and discourage any back-sliding in two and three year mortgage rates."
"However, it may decide to hint at a pause after significant rate rises this year and a stronger NZD. If it references the currency in this way (linking it to a lower rates profile) it may cause a modest further weakening in the NZD."
"It is possible that they pause from tightening this week although we think this is unlikely. The market is already pricing rates largely on hold (after a hike this week) until Q1 next year. As such, there is limited scope for rates to fall."