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📝RBNZ Unlikely to Accept Market Rate Cuts Pricing: BNZ

Despite the RBNZ’s best efforts to dissuade it, the market is

currently pricing in three rate cuts by the end of this year.

While we think this is entirely appropriate, we’re not

convinced the RBNZ would wish to condone this at this

juncture. Were it to do so then there is a very real risk that

the market would rally further into territory that would

very much unnerve the Bank. Don’t forget that market

pricing for year end is already around 100 basis points

below the Bank’s most recent track.

Putting all this together we feel even more comfortable with

our view that ultimately the RBNZ will be easing this year.

However, we are not convinced that today’s data will be

sufficient to shift the Bank’s stance just yet given its recent

past rhetoric. We now await RBNZ’s Chief Economist Paul

Conway’s January 30 speech with even greater interest in

the RBNZ’s update on recent data outcomes. - BNZ


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