MNI RBNZ Preview - November 2023: Economy Developing Broadly As Expected

EXECUTIVE SUMMARY:

• We expect the RBNZ to leave rates at 5.5%, where they have been since May, at its final meeting for 2023. Bloomberg consensus is unanimous at 5.5%. As a result, the focus will be on the accompanying updated forecasts, statement and press conference.
• In terms of projections, there are likely to be some near-term revisions with the medium-term little changed, which is the time horizon that the MPC focuses on. As the economy is evolving broadly as the RBNZ expected, the OCR forecast is likely to be little changed and headline CPI inflation still return to target in Q3 2024.
• The MPC will still want to send a strong message that policy needs to remain restrictive to bring inflation back to target. It won’t want easing brought forward and risk a reduction in mortgage rates. Its neutral stance should be maintained and the “high for longer” message is likely to be unchanged. There is unlikely to be further tightening but the first cut looks around a year away or possibly longer.

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MNI RBNZ Preview November 2023.pdf