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Bullish Price Sequence

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Earlier comments from RBNZ Assistant Governor Hawkesby (covered elsewhere) have resulted in the OIS space unwinding pricing of chances of a 50bp rate hike at the RBNZ's Oct meeting. With a 25bp hike now "perfectly priced."

  • The key passage from the speech noted that "the saying "tapuwae kōtuku" translates roughly to "considered steps", as you assess the environment around you. In the world of setting monetary policy, this translates to having confidence in the outlook for the economy, and inching in the right direction based on how the economy is likely to evolve. This is consistent with the observation that when there is a typical amount of uncertainty, and the risks are evenly balanced, then central banks globally tend to follow a smoothed path and keep their policy rate unchanged or move in 25 basis point increments."
Fig. 1: RBNZ Oct '21 OIS

Source: MNI - Market News/Bloomberg