23 Jul 2014
RBNZ to hike rates, risk of a pause in tightening cycle - TDS
FXStreet (Bali) - The Toronto FX Research Team at TDS, notes that after today's widely expected 25bp rate hike by the RBNZ, there is increased risk of a pause in the tightening cycle.
Key Quotes
"A soft inflation report and a sharp decline in dairy prices last week have prompted many in the market to ponder the odds of a pause in the RBNZ tightening cycle after the widely expected increase in the overnight cash rate to be delivered this evening."
"Our Singapore colleagues have been signaling this pause for a while. Moreover, they expect the RBNZ to resume its hiking cycle in December, with an additional 25bps increase for a year-end OCR target of 3.75%. This would leave the central bank only 75bps away from its new, lower, neutral rate of 4.5%, which is 200bps lower than the pre-global financial crisis neutral rate."
Key Quotes
"A soft inflation report and a sharp decline in dairy prices last week have prompted many in the market to ponder the odds of a pause in the RBNZ tightening cycle after the widely expected increase in the overnight cash rate to be delivered this evening."
"Our Singapore colleagues have been signaling this pause for a while. Moreover, they expect the RBNZ to resume its hiking cycle in December, with an additional 25bps increase for a year-end OCR target of 3.75%. This would leave the central bank only 75bps away from its new, lower, neutral rate of 4.5%, which is 200bps lower than the pre-global financial crisis neutral rate."