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Dominick Stephens, chief economist at Westpac, suggests that they are expecting the RBNZ to leave the OCR on hold but to shift to a strictly neutral monetary policy outlook.

Key Quotes

“We expect the RBNZ will say something similar to “the next move could be up or down”. The RBNZ’s OCR forecast will be flat until at least 2021.”

“Separately, we have changed our OCR call. We are now forecasting no change in the OCR for 2019, 2020, and 2021 (previously we forecast hikes from Nov-2020).”

“The biggest motivation for changing our OCR call is the construction outlook – it now looks as though construction activity will peak in 2019 and dissipate from 2020. Second, there is increasing evidence that the economy lost momentum in late-2018.”

“Markets are pricing an 80% risk of an OCR cut in 2019, but we think the odds are below 50% because we expect the economy to regain some momentum in 2019.”