Orr Sticks To Script

Nothing to really move the needle in the BBG interview with RBNZ Governor Orr, as he mostly reiterates comments made alongside last week’s monetary policy decision.

• He flags that the Bank is expecting to deploy at least another couple of rate hikes. General sell-side consensus sees the terminal OCR at 4.00% i.e. 2 more 50bp hikes through year-end, with the Bank’s own OCR track indicating a 40% chance of a move to 4.25% (peaking at 4.10%). Meanwhile, the OIS strip is loosely in line with the RBNZ’s track, currently pricing a peak rate of ~4.15% in May ’23.
• In terms of the language deployed, Orr reiterated that the Bank is looking for a decline in inflation expectations, while expressing confidence that the Bank can get on top of inflation. He also noted that slower economic growth is a pre-requisite for the Bank to achieve its targets, while he underscored the strong position of the NZ economy.