VIEW: Kiwibank: Strong Data Would May OCR Liftoff Increasingly Likely

Kiwibank note that "in terms of the interest rate outlook, the 1.6% GDP print came in well in excess of the Reserve Bank's forecast of another quarterly dip (-0.6%). As the markets digest today's strong report, we may see expectations shift toward an earlier lift-off in the OCR than the Reserve Bank has scheduled. If data continues to paint a healthy picture of the economy, our May '22 hike start date looks increasingly likely. One key downside is of course another covid community outbreak. Until herd immunity is achieved, the primary threat to the Kiwi economy will continue to be an outbreak of the virus, necessitating a tightening in alert levels. From our viewpoint, all wholesale interest rates look too low. And the Kiwi currency looks very low. We expect to see a strong lift in both interest rate expectations and the Kiwi dollar from here."