The RBNZ’s MPS on Thursday will be closely watched by markets, despite there being no chance of a shift in the OCR, according to analysts at Westpac.
Key Quotes
“That is because the RBNZ has signalled it is likely to remain on hold for a long time (March 2020, according to its OCR forecast, which is in line with market pricing), so that subtle shifts in bias will be important.”
“The key bits which markets will focus on (in a quite detailed document) will be (1) whether the guidance phrase “up or down” is retained (we think it will), and (2) whether the OCR forecast is tweaked (we think it won’t).”
“Changes in the economy since the May MPS sum to around zero impact on the OCR forecast, so the spirit of the statement should remain as it was in May (and in August’s minor review).”
“One thing to watch out for, though, is how the RBNZ views the Budget – we thought it was stimulatory, but in August the RBNZ said it was not. Retaining and explaining that judgement could give the MPS a dovish tone.”
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