RBNZ is unanimously expected to leave the OCR at 1.75% - TDS

The RBNZ is unanimously expected to leave the Official Cash Rate (OCR) at 1.75% this Thursday August 10, according to analysts at TDS.

Key Quotes

“The soft and hard data updates support RBNZ Governor Wheeler maintaining his long-held neutral stance, allowing him to repeat this week that the OCR was going to remain at 1.75% for a very (very) long time.”

“An unchanged OCR at 1.75% this week is unanimous consensus and reflected in the OIS strip. After the flat CPI print, and today’s underwhelming employment report, pricing for our February 2018 hike base case has morphed from 50% priced to barely 20% priced.”

“TD pencils in three hikes next year, in February, May and August to 2.5%. While this scenario appears aggressive this returns the OCR to the low of the previous cycle, and remains below the new neutral cash rate of 3.5%, as spelled out by Assistant Governor McDermott last week.”