### POV: COIN TOSS PRICING FOR RBNZ'S MAY......>

RBNZ: ### POV: COIN TOSS PRICING FOR RBNZ'S MAY MEETING LOOKS ABOUT RIGHT

- Yesterday's softer than exp. NZ CPI data has seen markets price a ~50% chance

of a RBNZ rate cut in May, up from ~25% Tuesday. While on face value, the

headline Y/Y print of +1.5%, missed both RBNZ (+1.6%) & market (+1.7%) exp., the

underlying details look a little better. The miss was driven by the volatile

tradable component, with non-tradable prices +2.8% Y/Y from +2.7%, while the

RBNZ's own sectoral factor inflation model held steady at +1.7% Y/Y.

- It is also worth noting that a RTRS interview with RBNZ Gov. Orr, released

Tuesday, noted that "a lot of it has been factored in because really what you're

looking at is a long period of being surprised to the downside of CPI so we've

kind of re-centered and thought about that." This suggests a marginal miss vs.

exp. was already likely factored in.

- What is certain is that the Bank's data dependent stance remains. The ANZ biz

survey & Q1 labour mkt report, as well as 2-Year inflation exp. provide the

critical data inputs ahead of the May 8 RBNZ decision. 6 of the 16 surveyed by

BBG look for a cut in May, but the incoming data could shift consensus.