Analysts a Westpac are now forecasting no change in the OCR at the November MPS.
Key comments:
- The balance of recent domestic data does not justify a cut, global sentiment has improved, and overseas central banks have indicated they will pause.
- We expect the RBNZ will remain open to future OCR cuts if necessary, similar to the rhetoric issued in September.
- The RBNZ’s OCR forecast will continue to imply a 50/50 chance of a future cut.
- We are now forecasting a cut in February, based on our view that global economic sentiment will worsen again.
- Holding the OCR in November would surprise financial markets, causing a lift in interest rates and the exchange rate.
FX implications:
Market pricing for RBNZ is for 18bp of easing on 13 November, with a terminal rate of 0.66%, according to the analysts, which is a weight on the bird. The 38.2% Fibo of the October range has been a supportive factor of late, around 0.6350 which likely guards risk to 0.62 the figure.
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