VIEW: ANZ: A Steady Hand On The Tiller

ANZ note “as widely expected, the RBNZ lifted the Official Cash Rate (OCR) 50bp to 4.75% today.”

• “The tone of the Monetary Policy Statement (MPS) was empathetic but firm. The RBNZ noted that they “gave consideration to an increase in the OCR of 50 or 75 basis points.””
• “The RBNZ’s OCR forecast still reaches a peak of 5.5% by the end of the year, and suggests they currently see a 25bp hike in April as the likeliest outcome. As before, cuts are pencilled in for the second half of 2024.”
• “The RBNZ’s growth and inflation forecasts, like everyone else’s, are of limited usefulness, given events. But for the record, the inflation forecast is little changed, wage growth was revised a little lower, and GDP revisions since November are much larger than forecast changes. A lot more will be known about the impacts of Cyclone Gabrielle by the April Monetary Policy Review, where we continue to expect a 25bp hike.”
• “Given the likely medium-term inflation impacts of the cyclone, we see the risks around our forecast 5.25% OCR peak as now tilted to the upside. However, like the RBNZ, we’re in wait-and-see mode until the picture becomes clearer.”