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NZD: 100% probability the RBNZ will cut again this year - Westpac

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 25, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Imre Speizer, Senior Market Strategist at Westpac, suggests that the market pricing for the RBNZ continues to slide, with a terminal rate of 2.25% now price in, i.e. a 100% probability the RBNZ will cut again this year.

    Key Quotes

    “We expect the RBNZ to cut by 25bp to 2.25% in June and again to 2.0% on September, although those two cuts could come as early as March and June. A recent accelerant was last week’s inflation report showing the lowest level of inflation since 1946 (base on a consistent data series). Inflation has been below the RBNZ’s target band of 1%-3% since Sep 2014.

    We don’t expect the RBNZ to cut the OCR at this week’s OCR Review, but we do see a decent chance of a shift in its language from a weak easing bias to an explicit (and unconditional) one. And if it doesn’t shift it language this week, it has another opportunity to do so at the 3 Feb annual speech by Governor Wheeler.”
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