May 21, 2024 00:11 GMT
RBNZ Dated OIS Pricing Two Cuts By Year-End Ahead Of Tomorrow’s Policy Decision
STIR
At the time of writing, RBNZ dated OIS pricing is little changed across meetings. Specifically:
- There's a 6% probability priced in for a 25bp hike at this week's meeting.
- Consensus also expects little change in tone from the central bank. The RBNZ is unlikely to give the nod to lower rates until it is more confident that inflation is on a clear path back to target.
- The pricing level of 5.51% for the May meeting also represents the anticipated terminal OCR.
- By year-end, a cumulative 45bps of easing is factored into the pricing.
- To provide context, it's worth noting that in late December, the market had expected over 100bps of easing by year-end, stemming from an anticipated terminal OCR of 5.53%.
Figure 1: RBNZ Dated OIS Expected Terminal & End-24 OCR (%)
Source: MNI – Market News / Bloomberg
Keep reading...Show less
137 words