RBNZ to maintain the OCR at 1.75% next Thursday - ANZ

Economists at ANZ present a preview on the RBNZ policy decision scheduled next Thursday, noting that the central will keep rates-on hold, as widely expected.

Key Quotes:

“We expect the RBNZ to maintain the OCR at 1.75% next Thursday, which is a view shared by the consensus and market, and strike a balanced tone.”

“In many ways, it seems like a great deal has changed since the RBNZ’s November Statement.”

“Headline inflation has returned to the RBNZ’s target band for the first time in two years, and some measures of core inflation are back at (or close) to 2%; inflation expectations have stabilised / risen; evidence of capacity pressures have intensified (with the exception of Q4 labour market figures); the global economy is looking firmer; the Fed is talking about three rate hikes this year and other central banks are hinting at less inclination to ease; and fiscal expansion has gained greater prominence globally.“

“This is occurring at a time when the domestic economy continues to march along at a pace well above trend.”

“Given the above, it is not surprising that the market is pondering the prospects of rate hikes.”