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VIEW: ASB: Speak Loudly And Swing A Big Stick

RBNZ
ABS note that "the RBNZ matched economists’ expectations with its 75bp hike. But the RBNZ’s stance was very hawkish, including discussing the potential for a 100bp hike. The RBNZ saw even greater urgency to lift the OCR, noting “that the OCR needs to reach a higher level, and sooner than previously indicated”.
  • "The RBNZ’s OCR forecasts imply a peak of 5.5%, considerably ahead of market pricing prior to the meeting. From a strong activity starting point the RBNZ is forecasting a recession next year: its focus is very much on getting inflation under control, after being surprised by how resilient the economy has been to date."
  • "From here we expect the RBNZ to hike the OCR by 75bp in February and by 50bp April, to a peak of 5.5% (from our previous market-topping 5.25% forecast). We do note that our inflation forecasts are lower than the RBNZ’s in the near term, so there is the risk that the RBNZ doesn’t quite get to 5.5%. But from the vantage point right now, the RBNZ is demonstrating clear urgency. There is three months of time to pass until the next decision, and the data flow will give a steer on whether continued urgency will remain appropriate in February."
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
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MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
HomepageBulletMarketsFixed Income BulletsForeign Exchange Bullets

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