Westpac Now Expects A 25bps Hike In April

Westpac note ... " We expect a 0.2% fall in GDP for the December quarter, following two quarters of extremely strong growth. This does not necessarily mark the start of a recession. GDP data has been choppy since Covid, and the details don’t tell a consistent story about whether monetary policy is biting. Nevertheless, it does show that the economy is coming from a less overheated starting point than the Reserve Bank thought. We think that will nudge them towards a smaller 25 basis point hike at the April OCR review."

"The RBNZ’s February projections sat somewhere between a 25 and a 50 basis point hike at the next OCR review on 5 April. Previously we favoured a 50 point move, on the basis that the RBNZ’s recent tactic have been to move quickly towards where it thinks the OCR needs to be. But with the likelihood of a much weaker than expected GDP result – and effectively no other major data releases between now and April – we now expect the RBNZ to lean towards a smaller 25 basis point increase."