MNI RBNZ Preview - August 2023: On Hold, OCR Path Likely Unchanged

EXECUTIVE SUMMARY:

• The RBNZ is unanimously expected to keep rates at 5.5% at its August 16 meeting, which will be the second consecutive pause. This is a statement meeting and will include revised forecasts and the focus will be on the expected paths for inflation and the OCR. They are unlikely to be revised significantly with the first rate cut expected in H2 2024 when inflation returns to the band.
• We don’t expect any material changes to the forward guidance in August with the RBNZ continuing to keep its options open. The Board is likely to reiterate that monetary policy needs to remain at a “restrictive level for some time”. But there could be a warning that domestic and underlying prices are looking sticky and that they need to moderate further.
• The next meeting is on October 4 and given the election on October 14 and only Q2 GDP data of any significance before then, rates are highly likely to be left at 5.5% then. The following meeting is November 29 and will include updated forecasts and will be highly dependent on quarterly data prints.

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MNI RBNZ Preview August 2023.pdf