RBNZ: Market pricing 76% chance of a 25bp cut to 1.75% in November - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the NZ monetary policy Market pricing since the 11 August MPS has been fairly stable, currently implying a 76% chance of a 25bp cut to 1.75% in November.

Key Quotes

“September is considered very unlikely (because the RBNZ said it favours moving on MPS dates, not at interim meetings) at only 10% priced. The 22 September meeting will be of some interest, though, for any updates on the likelihood of an OCR below 1.75%.

The August MPS implied (via the 90d track as well as the commentary) around a 50% chance of such, but since then there have been two notable developments: the NZD TWI has risen to be around 4% above the RBNZ’s forecast, and dairy prices have surged by around 30%. These developments offset each other, although the net impact may be viewed slightly positively. September’s one page statement may well reflect that, as well as probably warning about the ill-effects of a high NZD.”