RBNZ: Market pricing 86% chance of OCR cut in November - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the market pricing for RBNZ’s November OCR cut has been stable during the past two weeks at around 80% (currently 86%).

Key Quotes

“Q3 CPI data was unsurprising to RBNZ forecasts, although it did surprise a number of analysts who expected something lower.

Markets have consistently priced in a greater than 50% chance of a November cut since Assistant Governor McDermott’s speech in September reminding all that the “promised” cut remains in the pipeline.

So what could spook them from cutting? A sharp rise in inflation expectations on 2 Nov (unlikely, given CPI is running at only 0.2%/yr), or a plunge in the NZD, come to mind. We continue to expect a cut on 10 Nov, followed by a lengthy pause.”