ASB on their expectation for the Reserve Bank of New Zealand monetary policy announcement on March 10
ASB Chief Economist Nick Tuffley (bolding is ASB's):
- We expect the RBNZ will leave the OCR unchanged at 2.5% at the upcoming OCR announcement and Monetary Policy Statement
- But we expect the RBNZ to adopt a stronger easing bias, signalling further rate cuts as imminent (albeit conditional on the data)
- We expect the RBNZ's 90 day track to signal one further rate cut in 2016. We continue to expect two 25bp rate cuts, in June and August although risks are skewed to an earlier start
On the NZ dollar, ASB says:
- The RBNZ is relying heavily on further NZD deprecation to return inflation back to target
- The NZD comes down to the relativities: the ECB and PBoC are now expected to ease further this year and the Fed is expected to deliver fewer hikes than originally planned
- Just to maintain the relativities, the RBNZ also needs to ease - or else face an overall tightening in monetary conditions
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Interesting 'relativities' comments on the NZD, which could also be applied to the AUD. I posted on Goldman Sachs yesterday who argue for RBA cuts based on similar tightening of financial conditions
