MNI RBNZ Review – October 2023 RESEND: Extended Pause Rather Than Hike

EXECUTIVE SUMMARY:

• The RBNZ left rates at 5.5% at its October meeting where it has been since the last hike in May, and it reiterated its high-for-longer stance but didn’t imply that there may be more tightening. The NZ outlook “remained similar” to the last meeting. The statement suggests that while there may some near-term changes to the bank’s expectations, its focus, the medium-term, is unaltered.
• There was a tweak to the end of the statement saying that policy needs to remain restrictive for “a more sustained period of time” rather than “the foreseeable future”. This may be implying that rather than increase rates further, policy may stay tight for longer than is currently projected. Key data are released before the next meeting, including Q3 CPI & inflation expectations and employment/wages. The November 29 meeting will also include revised forecasts.
• At 5.76%, the market still has a 25bp hike priced by April 2024. Prior to the RBNZ decision, a 25bp hike had been fully priced by February 2024.

Click to view review (correct file attached):

MNI RBNZ Review - October 2023.pdf