RBNZ: Rate cut decision is going to be a close call – BNZ

FXStreet (Delhi) – Kymberly Martin, Senior Market Strategist at BNZ, sees a higher chance of an RBNZ cut this week than market pricing, but still see it as a close call.

Key Quotes

“Ahead of Thursday’s RBNZ meeting, the market prices less than a 20% chance of a cut. We see it as closer to 50/50. In particular, we feel the RBNZ may be feeling uncomfortable with the almost 7% rebound in the NZ TWI since its last meeting.”

“If the RBNZ does not deliver a cut this week we see a high probability of a cut at its Dec meeting. This would take the OCR to a cyclical trough of 2.50%. We see the cash rate at that level throughout 2016. By contrast, the market only fully prices a 25bps OCR cut by March next year, and prices a small chance of a further cut thereafter.”

Kymberly Martin, Senior Market Strategist at BNZ, sees a higher chance of an RBNZ cut this week than market pricing, but still see it as a close call.

(Market News Provided by FXstreet)