Preview: Westpac sees RBNZ hiking OCR to 2.75% tomorrow, data dependent from there

最近のFX関連情報Central Banks

Westpac’s central call is for a straightforward, consensus 25bp hike with little new signal, which should limit the scope for a sharp market reaction unless the RBNZ’s language on October diverges from the data dependent framing Westpac expects. The bank puts only a 10 to 15 percent probability on either a hawkish surprise, an upgraded neutral rate assumption or a stronger signal toward back to back hikes in October and December, or a dovish surprise suggesting a pause through December, meaning the balance of risk around the base case is roughly symmetric rather than skewed. For NZD, the more market moving elements are likely to be forecast track rather than the hike itself, since the OCR path is already priced consistently with a 3 percent year end level, and the fact that NZD TWI is already running above the RBNZ’s own May assumption is worth flagging as a modest tightening in financial conditions the central bank may reference. Eckhold’s own view, that further hikes are likely required through 2027 given persistently too high core inflation, positions Westpac somewhat more hawkish than the passive, purely data dependent read the RBNZ itself is expected to communicate.

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Earlier:

Westpac sees the RBNZ delivering an uncontroversial hike to 2.75 percent, then leaving the door open on October without committing either way.

  • Announcment due at 0200 GMT / 2200 US Eastern time 

Summary:

  • Westpac expects the RBNZ to raise the Official Cash Rate by 25 basis points to 2.75% at its 2 September Monetary Policy Statement, describing the decision as likely to be reached by consensus.
  • The bank expects the RBNZ’s projections to imply a 3% OCR by year end, unchanged from the May MPS, with the rate path beyond 2026 also remaining similar to the May profile that implied a peak around 3.3%.
  • Westpac expects the RBNZ to be equivocal on the chance of an October hike, adopting a data dependent approach given the OCR will be close to the bank’s often cited 3% neutral rate and given the volume of data due before the October meeting.
  • Westpac chief economist Kelly Eckhold sees only a 10 to 15% probability on a more hawkish scenario, where the RBNZ signals October and December hikes are both likely, taking the OCR to 3.25% by year end, and a similar 10 to 15% probability on a more dovish scenario, where the RBNZ suggests it can take time to assess the inflation outlook before hiking further.
  • Since the May MPS, activity data have been broadly close to the RBNZ’s forecasts, the labour market has stayed soft with unemployment at 5.6% versus the RBNZ’s 5.4% forecast, headline inflation came in at 4.1% for the year to June against a 4.2% forecast, and inflation expectations across households, businesses and forecasters have declined back toward pre oil shock levels.
  • Eckhold’s own view is that the strategy to return the OCR to around 3% by year end is uncontroversial, but that core inflation remaining too high means further hikes are likely required through 2027 once the recovery is more sustained, favouring a data dependent approach from here.

Westpac expects the Reserve Bank of New Zealand to raise the Official Cash Rate by 25 basis points to 2.75% at its Monetary Policy Statement on 2 September, describing the move as a straightforward, consensus decision within the Monetary Policy Committee.

Chief economist Kelly Eckhold said the RBNZ’s projections are likely to continue implying a 3% OCR by year end, matching the May MPS, with the rate track beyond 2026 also expected to stay close to the May profile, which had the OCR peaking at around 3.3%. The key point of interest for the release will be how the RBNZ signals the likelihood of a further hike in October. Westpac expects the central bank to be equivocal, favouring a data dependent approach given the OCR will be close to the 3% neutral rate level the RBNZ frequently references, and given the substantial volume of data due for release across September and October.

Westpac sees only modest, roughly symmetric risks around that base case. A hawkish scenario, in which the RBNZ signals firm resolve to keep hiking in October and beyond, potentially through a higher neutral rate assumption or explicit guidance that an October increase is more likely than not, is assigned a probability of 10 to 15%; under that scenario, markets could conclude the OCR reaches 3.25% by year end via hikes in both October and December. A dovish scenario, in which the RBNZ suggests it can take time to assess the inflation outlook after 50 basis points of hikes, potentially raising doubts about a December move, is assigned a similar 10 to 15% probability.

Eckhold’s own assessment is that the strategy of returning the OCR to around 3% by year end is clear and uncontroversial, though it remains unclear whether further increases will be needed at every remaining 2026 meeting given the fragile state of the recovery and the still embryonic improvement in the labour market. Nonetheless, he remains sceptical that inflationary supply shocks will dissipate quickly or sustainably, and expects that core inflation running too high will likely require further rate increases through 2027 once the economy is sustainably operating above trend and the labour market recovers, making a data dependent approach the appropriate stance for now.

That view is set against a backdrop largely consistent with the RBNZ’s own May forecasts. GDP and labour market data have come in close to expectations, with unemployment at 5.6% slightly above the RBNZ’s 5.4% forecast, while headline inflation eased to 4.1% for the year to June against a 4.2% forecast, and inflation expectations across households, businesses and professional forecasters have declined back toward levels seen before the recent oil price spike. Domestic financial conditions have tightened somewhat since May, with one and two year fixed mortgage rates up around 35 basis points, and the New Zealand dollar trade weighted index running above the level assumed in the RBNZ’s May projections, both factors that may feed into the central bank’s updated assessment of financial conditions at the September meeting.

This article was written by Eamonn Sheridan at investinglive.com.

最近のFX関連情報Central Banks

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