31 Oct 2013
Flash: RBNZ rate increases inevitable in 2014 - ANZ
FXstreet.com (Barcelona) - While he RBNZ remains well on track to increases on rates over 2014, moderate price pressures and offsetting shocks, give the Central Bank some room to stay on the sidelines, according to Cameron Bagrie and Sharon Zöllner,
Chief Economist and Senior Economist at ANZ, respectively.
Key Quotes
"The bigger picture is focused on core inflation pressures, with the key final paragraph little changed. With the economy now expanding solidly, OCR increases are inevitable."
"We expect the OCR to move up from the first half of 2014, but with a modest pace of policy tightening over the next couple of years compared to previous cycles due to the realities of being out of sync with global trends."
"We’re closely watching our monthly inflation gauge: should we see subdued readings in the coming months we’ll shift our first hike call from March to June."
"With just over 50% odds of a 25bp OCR hike priced in for March, we see little room for an extension of the recent rally in front end rates, particularly now that the RBNZ is focusing on slightly stronger growth, and is paying more attention to inflation expectations. This should put a floor under interest rates."
"We still need to be cognisant of what the NZD is doing, and with the Fed in a holding pattern, and US data going through a soft patch, the NZD is likely to be well supported into year end, taking some pressure off interest rates."
Chief Economist and Senior Economist at ANZ, respectively.
Key Quotes
"The bigger picture is focused on core inflation pressures, with the key final paragraph little changed. With the economy now expanding solidly, OCR increases are inevitable."
"We expect the OCR to move up from the first half of 2014, but with a modest pace of policy tightening over the next couple of years compared to previous cycles due to the realities of being out of sync with global trends."
"We’re closely watching our monthly inflation gauge: should we see subdued readings in the coming months we’ll shift our first hike call from March to June."
"With just over 50% odds of a 25bp OCR hike priced in for March, we see little room for an extension of the recent rally in front end rates, particularly now that the RBNZ is focusing on slightly stronger growth, and is paying more attention to inflation expectations. This should put a floor under interest rates."
"We still need to be cognisant of what the NZD is doing, and with the Fed in a holding pattern, and US data going through a soft patch, the NZD is likely to be well supported into year end, taking some pressure off interest rates."