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Westpac analysts delivered their early thoughts on the upcoming Reserve Bank of New Zealand (RBNZ) Overnight Cash Rate (OCR) call due next week.

Key quotes

We expect the RBNZ to repeat its main message that the OCR is expected to remain on hold for a long while, but the timing and direction of the next move will depend on how the economy evolves.

Markets are fixated on whether the RBNZ will repeat the words “up or down” used in its last policy guidance paragraph.

That is a red herring. The RBNZ may well choose different words to express its on hold stance, and might even choose words other than “up or down.” This would not necessarily constitute a signal that the OCR outlook has changed.

The RBNZ is keen to avoid formulaic communications, and might chop and change its wording even if its intentions have not changed.

Markets will need to assess the actual meaning of the RBNZ’s press release, rather than mechanically reacting to changes in wording.

Beneath the policy guidance paragraph, the details of the press release might be slightly more hawkish than the May statement.