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22 Jan 2016
NZD: Market expects more RBNZ easing – Westpac
FXStreet (Delhi) – Imre Speizer, Research Analyst at Westpac, suggests that since the beginning of January, the market has been willing to price in further easing in NZ.
Key Quotes
“This is in contrast to the period immediately after the December cut, when the RBNZ signalled a probable end to the easing cycle. The recent catalysts have been January’s sharp fall in oil prices, global risk aversion, and the weak NZ Q4 CPI data.
We have long expected the RBNZ will need to reduce the OCR further by 50bp to 2.0%. Our forecast dates are June and August, but the weak CPI data and oil price fall raise the risk it could be as early as March and June.
The 28 Jan meeting and the 3 Feb monetary policy speech by Governor Wheeler should mark a dovish shift in stance to an unconditional easing bias, paving the way for those cuts. On an interest rate differential argument alone, NZD/USD remains a sell.”
Key Quotes
“This is in contrast to the period immediately after the December cut, when the RBNZ signalled a probable end to the easing cycle. The recent catalysts have been January’s sharp fall in oil prices, global risk aversion, and the weak NZ Q4 CPI data.
We have long expected the RBNZ will need to reduce the OCR further by 50bp to 2.0%. Our forecast dates are June and August, but the weak CPI data and oil price fall raise the risk it could be as early as March and June.
The 28 Jan meeting and the 3 Feb monetary policy speech by Governor Wheeler should mark a dovish shift in stance to an unconditional easing bias, paving the way for those cuts. On an interest rate differential argument alone, NZD/USD remains a sell.”