ING anticipates a 25bp 'insurance' hike from the RBNZ on July 8th to anchor inflation expectations. However, declining oil prices have increased the risk that this will be a one-off move, capping potential NZD gains.
Key Takeaways
- 1.ING expects the Reserve Bank of New Zealand to deliver a 25bp 'insurance' hike to 2.50% at the July 8th meeting.
- 2.While the RBNZ is expected to hike, the risk that this is a one-off move has increased significantly due to falling oil prices.
- 3.A hawkish, one-off hike may limit NZD upside as the market may interpret the pause in further hikes as a policy error or shift in outlook.
Table of Contents
- RBNZ set to deliver July insurance hike
- May's rate projections largely invalidated by now
- But it's risky to disappoint markets
- RBNZ policy was accommodative before the Iran war
- An insurance hike, another one close to 50-50
- Less upside for NZD
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Authors
Francesco Pesole
Securities
NZD
Themes
Central Bank PolicyInflation Expectations
Regions
Asia PacificNew ZealandAustralia
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