According to David Goodman, head of macro strategy at Westpac, RBNZ pricing has shifted significantly lower over the past month due to global risk aversion and slowdown in growth, a slowdown in NZ economic momentum, acknowledgement that the RBNZ is reluctant to hike but rather is willing to tolerate an inflation overshoot, and concerns the RBNZ’s proposed higher capital requirements will lead to upward pressure on lending rates and/or a slowdown in lending.
Key Quotes
“For our part, we see the RBNZ capital proposal as causing a slightly slower pace of OCR hikes in the early 2020s.”
“The key data release will be Q4 CPI on 23 Jan, and then the RBNZ MPS on 13 Feb. For CPI, we forecast 0.1% with fuel prices weighing, but the details to be ‘hawkish’ from RBNZ’s point of view.”
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