RBNZ: Steady as she goes – Nomura

Tomorrow’s Reserve Bank of New Zealand (RBNZ) policy meeting is widely expected to be a muted affair, according to Sam Bonney, Research Analyst at Nomura.

Key Quotes

“According to Bloomberg, there is a universal consensus that the cash rate will remain unchanged, at 1.75%. Moreover, this is acting Governor Spencer’s last meeting before the new governor, Adrian Orr, takes the helm on 27 March and it seems understandable that he would want to give the incoming governor maximum policy flexibility via a neutral statement without strong policy guidance.”

“On the fundamentals, too, we doubt recent developments would have shifted the RBNZ’s thinking in any material sense. Finally, we note that this is a non-policy statement month, so there will not be any new RBNZ forecasts. We pencil in two 25bp rate hikes in H2 2019 but will look to the new governor and any upcoming changes to the Policy Targets Agreement to firm up our view. We do expect the Reserve Bank of Australia (RBA) to hike first.”