Wednesday, November 18, 2015

RBNZ to cut by March - RBNZ

FXStreet (Guatemala) - Analysts at ANZ noted that in respect of the RBNZ, a 25bps OCR cut by the end of the year is about 35% priced into the OIS market, with a rate cut fully priced in by next March, and rates expected to trough just below 2.50% by mid next year.

Key Quotes:

"This is close to our core view, although our bullish strategic view suggests the market should be pricing in a lower OCR profile and a longer period on the side lines over 2016 and into 2017 before rates rise again.

There is also the possibility that the current run of low inflation is the new normal and persists after one-off inflation suppressants (such as the impacts of low oil prices) drop out of the inflation window. We note that changes in market expectations on when the OCR cycle is likely to shift from prospective cuts to hikes will have significant implications for mid-curve swaps and bonds."
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