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RBNZ: VIEW: ASB continue "to exp. the RBNZ to remain on hold into H120, though
the risk is a later start given the moderate growth exp. & still-benign wage &
core inflation trends. The RBNZ largely delivered what was exp., trimming its
growth exp. a touch after a strong Q218 outcome & boosting its near-term
inflation exp. The policy assessment's opening wording presents directional
risks to the OCR in a different way, but the message is essentially the same.
The OCR could move either way, depending on developments. The RBNZ remains
mindful of the downside risks to growth presented by weak biz conf. But it is
also wary that inflation pressures may turn out to be stronger than it exp.,
particularly if biz pass on cost pressures to a greater extent than factored in.
The RBNZ's unrevised OCR track suggests that the risks of a near-term OCR cut
have not intensified. The strength of Q3 employment highlighted this also. A cut
remains a non-negligible risk, but material weakness in 'hard' data such as GDP
would be needed to seriously entertain a cut. But we flag that our own growth
outlook is more in line with the RBNZ's downside risk scenario than its central
view, though we also exp. a stronger inflation impact from wage growth."