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Needle Still Points South


Yields Bounce as Equities Make New Monthly Highs


Heading North


Bull Rally Accelerates


Economists Survey Raises 2021 CPI Forecast To 4.9%

RBNZ: ### POV: Is the RBNZ Gov. on the way to prepping markets for a lower for
longer scenario?
- On Thursday RBNZ Gov. Orr noted that the RBNZ "expects very benign inflation
going forwards." Orr went on to state that "what matters is the confidence &
expectation that we are aiming for the midpoint of 2% all the time."
- The RBNZ moved to a dual-mandate in March, which requires monetary policy to
support maximum levels of sustainable employment. While the inclusion of the
objective warrants attention, it doesn't displace the importance of the
inflation mandate.
- Markets are pricing a ~80% chance of a rate hike over the next 12 months at
the start of biz on Friday, unch. from yesterday. The CPI data released in lieu
of Orr's statement was slightly stronger than exp., so the question must be
asked whether Orr used the address to set out a stall re: tempering rate hike
expectations? It's unlikely as he pointed to inflation exp.; for reference the
RBNZ's survey of inflation expectations revealed a 1.90% median over a 1-year
horizon & a 2.10% median over a 2-year horizon in Q1.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |