That'll be Thursday morning 11 August 2016 NZ time

  • Bloomberg have surveyed 16 analysts/economists, each one of them expect the bank to cut rates by 25bp
  • The latest market pricing I have seen outs the probability of a 25bp cut at 108% (that is, 100% chance of a 25 bp cut is priced in, and 8% for a 50 bp cut)

The cut is expected on the basis that inflation is too low, and while its expected to start moving higher it'll do so at too slow a rate.

The bank's economic update statement two weeks ago also highlighted the strength of the NZD as a concern.

The outlook is for further RBNZ cuts later this year and even into next

The question for the NZD is whether this clear telegraphing of a cut has dulled its potential impact tomorrow. That is, will the NZD fall on a 25bp rate cut? If it does it'll be met with bids as those who have shorted into this meeting cover.

Given the RBNZ is clearly concerned about the exchange rate the potential for a 50bp cut instead of 25 is there. I don't how the RBNZ would frame this up so as not to be accused of currency manipulation. The data on the NZ economy is positive, and house prices (especially in Auckland) market have a rocket strapped to them.

On balance, I expect a 25bp cut, further dovish language in the statement, and the NZD to be resilient on it. But there is potential for a 50bp cut which would be more negative for the currency.

What do the people of ForexLive think? 25, 50, hold?