🏦🇳🇿Cable FX Macro Weekly Note: RBNZ November Decision

**As seen in Risk In The Week report 11/18/22, subscribe at cablefxm.co.uk/reports

Back in early October the RBNZ raised its official cash rate to 3.50% from 3.00%, the 50bps move came on the back of persistent wage pressures and high inflation. This was also perceived with a tone of divergence, as the RBA had recently scale down its pace to 25bps. The RBNZ said it was appropriate to continue tightening, however, the committee expressed mixed views on the size of the October hike as both 50bps and 75bps were discussed at the meeting. The board also noted weaker growth for New Zealand’s trading partners while a range of indicators highlight broad-based price pressures, meanwhile domestic spending was said to have remained resilient. On the FX front, the RBNZ said that a lower kiwi rate sustained further upside risks to CPI, we remind you the NZD TWI has rallied about 5.9% from the October meeting levels and is now only 1.7% down YTD. The desk at ING says that worsening conditions and a downturn in the housing market argued against a 75bps from the RBNZ in November, they’re still not convinced that the central bank will meet market expectations, but a pivot is unlikely to be on the cards. ING’s view is that a 50bps rate hike might be perceived as dovish since there is markets price in a 50% chance the RBNZ deliver a 75bps move, however, the NZD could still rise on the back of an upward revision to the OCR path.