RBNZ: Market pricing only 50% chance of a hike in Nov - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the market pricing for the RBNZ continues to retreat and it now implies the first hike will be in Feb 2018 (compared to Nov 2017 prior to the Nov MPS).

Key Quotes

“The chance of a Nov hike is seen as 50%.”

“The RBNZ’s Nov MPS projected via its OCR forecast that it would remain on hold until late 2019. Inflation has risen during the past few quarters but at 1.3% remains well shy of the 2.0% target. Moreover, our economists forecast CPI gains from here will be very gradual. To offset the weakness in imported prices and generate a further rise in domestic inflation, the RBNZ needs domestic spending and investment to continue trucking along. And that will require continued support in the form of low borrowing rates.”