RBNZ: 90% chance of another cut in November - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that the NZ monetary policy Market pricing since the 11 August MPS has been fairly stable, implying a 90% chance of another cut in November.

Key Quotes

“September has fallen even further out of favour at only 20% priced, since it’s an interim meeting and thus unfavoured by the RBNZ for policy shifts. However the market is likely to maintain some chance of a Sep easing in case the NZD breaks higher.

The expected terminal rate of 1.54% implies around an 80% chance of a 1.5% OCR by mid-2017. That is not inconsistent with the RBNZ signalling it has considered the possibility of cutting to 1.5% if economic developments warrant it. Indeed, its 90d interest rate projection of 1.75% implies a 1.60% OCR (using a bank bill-OCR spread of 15bp), even lower if a more market-based spread is used.”