NZIER shadow board split as RBNZ rate call turns line-ball for July
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A near-even shadow board points to genuine uncertainty heading into the July review, suggesting markets should not treat a hold as a foregone conclusion and may see volatility around the decision itself. The consistent view that the OCR needs to reach 3 to 3.25% over the coming y
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4 itemsNZIER shadow board backs RBNZ hold this week (May 27) at 2.25% but rate rises seen ahead
RBNZ preview: A closer call than markets expect
The desk anticipates a potential interest rate hike at the Reserve Bank of New Zealand's upcoming meeting on May 27, although it acknowledges that the RBNZ's tendency towards dovishness may lead to a 'hawkish hold'. Per the full note from ing-think, there is an underappreciated risk of tightening, with expectations suggesting the first of two hikes could occur as early as July. With external factors likely to drive NZD movements, market participants should remain vigilant. Supporting arguments for a hike include evolving inflation data suggesting underlying pressures and a global economic recovery, particularly as the RBNZ has previously suggested readiness to act if necessary. As such, new projections could indicate a tightening cycle starting in Q3, reflecting a shift in the central bank's stance. While the desk leans towards anticipating these hikes, it implicitly dismisses the counter viewpoint that favors a prolonged period of policy accommodation—arguing instead that inflationary pressures are likely to prompt action sooner rather than later.