RBNZ: August rate cut stands a 45% chance - Westpac

Imre Speizer, NZ Market Strategist at Westpac, suggests that market pricing for August briefly rose to 75% last week, amid an intensification of Brexit-related global risks.

Key Quotes

“However RBNZ Spencer’s speech on housing reversed that, with only 45% now priced in. Not only did the RBNZ disappoint by not announcing new macro-prudential policy (that the speech was to be published led markets to expect something “fresh”; what they got was a restatement of previous messages), the comment that the lowering the OCR further would increase stability risks was interpreted as a reluctance on RBNZ’s part.

We still see a strong case for further easing, mainly because the NZD TWI is so far averaging 7.5% above the RBNZ’s forecast for Q3, hindering its primary objective of inflation.”