### POV: INTERESTING START FOR RBNZ GOV ORR;...>

RBNZ: ### POV: INTERESTING START FOR RBNZ GOV ORR; RATE CUT TEASER, BUT UNLIKELY

Despite comments from RBNZ Gov. Orr, it is still unlikely the next move in rates

will be lower. Markets are pricing 13bp worth of tightening over the next 12

months, against ~20bp in front of yesterday's decision. Orr re-jigged the MonPol

statement Thurs, bringing forward guidance to the top, noting that "the

direction of our next move is equally balanced, up or down. Only time and events

will tell." However, further along in the statement the RBNZ suggested "the

emerging capacity constraints are projected to see CPI gradually rise to our

2.0% target. To best ensure this outcome, we expect to keep the OCR at this

level for a considerable period."

- The RBNZ highlighted a mix of upside and downside risks. In a subsequent

interview Orr suggested a rate cut was a "valid possibility." While this

reiterates the message from the SMP, it is perhaps a case of the new Governor

covering all the bases under the new PTA as opposed to a dovish stance, perhaps

best intimated via the RBNZ's OCR projections. The Bank's OCR projections now

look for a hike in Q319; prev Q219, hardly a monumental shift.