Trial now

Kiwi Outperforms Amid Inflation Surge


Westpac Enter Paid 10s EFP


Policy Pressure Rules The Roost On Monday


(Z1) Off Lows, But Remains Weak

Sign up now for free access to this content.

Please enter your details below and select your areas of interest.

  • Overall, the minutes show that the MPC turned visibly more hawkish given significant changes to macro outlook: overheating domestic demand, sizeable positive output gap, and sharp deterioration of the current and prospective inflation outlook amidst a balance of risks for inflation still skewed to the upside.
  • In their assessment, given the backdrop of an overheating economy (positive output gap and visible deterioration of the external accounts despite favourable terms of trade) and above-target inflation throughout the relevant horizon for monetary policy, the monetary stance needs to eventually move into slightly restrictive territory.
  • The upcoming September inflation print and legislative developments around a potential fourth withdrawal of pension savings will ultimately determine whether at the Oct 13 meeting the MPC will follow-up with another 75bp hike or go back to a milder 50bp hike. In their view, another 75bp rate hike is warranted.
  • At this juncture GS expect the policy rate to reach 2.50%-2.75% by end-2021, and further up to a slightly restrictive 4.00%-4.25% by end-2022, i.e., modestly above-neutral.