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Analysts at TD Securities explained that on August 9, the RBNZ surprised the markets with the most dovish tone in years.

Key Quotes:

“After a short reconnaissance to Wellington earlier this week, we better understand the Bank’s concerns about slowing growth and inability to lift inflation back to target.”

“In a Statement that surprised even the most dovish analysts, the Bank needs to see a pickup in growth and inflation to prevent a cut, not trigger a rate hike as previously thought.”

“The risk of an OCR cut has shifted from near-zero to around 30%.”

“We push out our first hike from May to November 2019. As we remain more constructive about the outlook for New Zealand, we need to see substantial growth and/or inflation disappointment to push the first hike into 2020.”