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MNI RBNZ Preview - October 2022: Another 50bp Hike In Store

EXECUTIVE SUMMARY

  • There is broad consensus that the RBNZ will raise the Overnight Cash Rate by 50bp in the fifth consecutive move of that magnitude, pouring more cold water on domestic price pressures at this week’s interim (non-MPS) Monetary Policy Review.
  • Inflation pressures remain acute despite some preliminary signs of reprieve on that front and employment remains above the maximum sustainable level. A sharp depreciation in the exchange rate will amplify to imported inflation, raising pressure on the Monetary Policy Committee to keep tightening at pace.
  • In a recent speech, Governor Orr recognised that the tightening cycle is “very mature, it’s very advanced,” even as the central bank still has “a little bit more to do before we can drop to our normal happy place, which is to watch, worry and wait for signs of inflation up or down.”
  • With a 50bp rate hike fully baked in for this week, the main focus will fall on forward-looking comments amid ongoing adjustments to terminal rate pricing. Forward-looking comments will be scrutinised for any signs of imminent moderation in the Reserve Bank’s hawkish resolve.

Click here to see the full preview: MNI RBNZ Preview October 2022.pdf

Central Bank PreviewHomepageRBNZ - PreviewCentral Bank ReportsMarkets
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