Strategists at Westpac Institutional Bank would be expecting a shift to neutral bias from the Reserve Bank of New Zealand (RBNZ) if coronavirus had not outbroken. They have also lowered their near-term outlook for the NZD/USD.
Key quotes
“We expect the RBNZ to retain an easing bias at its Monetary Policy Statement on Wednesday, although it will probably be described as a conditional one, dependent on the impact of the coronavirus pandemic.”
“The OCR forecast will probably continue to show a terminal rate of 0.9% which effectively signals a rate cut as a 50/50 likelihood.”
“NZD/USD lower near term to sub-0.6400, affected by global concerns about coronavirus epidemic. Then possible rebound to 0.6600 as NZ economic outperformance is recognised, but ongoing global risks will weigh.”
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