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NZGBS: Steady Ahead Of The RBNZ’s Policy Decision

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In local morning trade, NZGBs are unchanged ahead of today’s RBNZ Policy Decision. Overnight, US tsys rebounded from Monday's losses, taking the dovish side of two-way comments from Fed Gov Waller.

  • Concerning today’s Policy Decision, the RBNZ is unanimously expected to leave rates at 5.5% as it is yet to be convinced 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. (See full preview here)
  • Swap rates are little changed.
  • RBNZ dated OIS pricing is unchanged across meetings, with a 7% probability priced in for a 25bp hike today.
  • The pricing level of 5.52% for the May meeting also represents the anticipated terminal OCR. By year-end, a cumulative 43bps of easing is factored into the pricing.
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In local morning trade, NZGBs are unchanged ahead of today’s RBNZ Policy Decision. Overnight, US tsys rebounded from Monday's losses, taking the dovish side of two-way comments from Fed Gov Waller.

  • Concerning today’s Policy Decision, the RBNZ is unanimously expected to leave rates at 5.5% as it is yet to be convinced 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. (See full preview here)
  • Swap rates are little changed.
  • RBNZ dated OIS pricing is unchanged across meetings, with a 7% probability priced in for a 25bp hike today.
  • The pricing level of 5.52% for the May meeting also represents the anticipated terminal OCR. By year-end, a cumulative 43bps of easing is factored into the pricing.