Imre Speizer, Senior Markets Strategist at Westpac, suggests that
markets have increased the chance the RBNZ will ease by 25bp on 10
December, from 48% last week to 60% currently.
Key Quotes
“A full cut is not priced until March 2016. We assess the chance of a December cut at around 60%. If we’re right about the RBNZ cutting rates, it will need to be very careful with the language in its accompanying Statement.”
“In particular, we expect RBNZ communications to carefully tread the fine line between keeping its options open by not removing the possibility of further rate cuts, and at the same time not explicitly signalling that further cuts are likely.”
“In particular, the RBNZ will be aiming to avoid either a big jump in the NZ dollar (which puts further downward pressure on inflation), or a sharp fall in interest rates (which risks stoking the housing market). A tricky task, but phrases such as “Future OCR decisions will depend on the emerging flow of data” and “The OCR is expected to remain low for some time,” along with the detailed projections contained in the accompanying MPS should help contain market reaction.”
Key Quotes
“A full cut is not priced until March 2016. We assess the chance of a December cut at around 60%. If we’re right about the RBNZ cutting rates, it will need to be very careful with the language in its accompanying Statement.”
“In particular, we expect RBNZ communications to carefully tread the fine line between keeping its options open by not removing the possibility of further rate cuts, and at the same time not explicitly signalling that further cuts are likely.”
“In particular, the RBNZ will be aiming to avoid either a big jump in the NZ dollar (which puts further downward pressure on inflation), or a sharp fall in interest rates (which risks stoking the housing market). A tricky task, but phrases such as “Future OCR decisions will depend on the emerging flow of data” and “The OCR is expected to remain low for some time,” along with the detailed projections contained in the accompanying MPS should help contain market reaction.”
