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MNI RBNZ Preview – May 2024: Policy To Stay Restrictive

The RBNZ is unanimously expected to leave rates at 5.5% as it is yet to be confident that inflation will sustainably return to target.

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EXECUTIVE SUMMARY:

  • The RBNZ meets on May 22 and will also release updated staff forecasts and hold a press conference. It is unanimously expected to leave rates at 5.5% as it is yet to be confident that inflation will sustainably return to target. We don't expect the tone of the statement or the updated projections to be significantly changed with guidance that “a restrictive monetary policy stance remains necessary” retained.
  • Given elevated non-tradeables inflation, the MPC will likely still want to see a couple of quarters of CPI data to determine if domestic price pressures have eased sufficiently. With Q3 CPI not released until October 16 and only one meeting left before year end thereafter, it looks like the RBNZ’s prolonged hold will continue through this year.
  • The pricing level of 5.51% for the May meeting also represents the anticipated terminal OCR. By year-end, a cumulative 45bps of easing is factored into the pricing.

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MNI RBNZ Preview May 2024.pdf

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EXECUTIVE SUMMARY:

  • The RBNZ meets on May 22 and will also release updated staff forecasts and hold a press conference. It is unanimously expected to leave rates at 5.5% as it is yet to be confident that inflation will sustainably return to target. We don't expect the tone of the statement or the updated projections to be significantly changed with guidance that “a restrictive monetary policy stance remains necessary” retained.
  • Given elevated non-tradeables inflation, the MPC will likely still want to see a couple of quarters of CPI data to determine if domestic price pressures have eased sufficiently. With Q3 CPI not released until October 16 and only one meeting left before year end thereafter, it looks like the RBNZ’s prolonged hold will continue through this year.
  • The pricing level of 5.51% for the May meeting also represents the anticipated terminal OCR. By year-end, a cumulative 45bps of easing is factored into the pricing.

Click to view full preview:

MNI RBNZ Preview May 2024.pdf