Reserve Bank of New Zealand seen hiking rates in August next year – ANZ

Analysts at ANZ offer their afterthoughts on the Reserve Bank of New Zealand (RBNZ) monetary policy meeting held a day before.

Key Quotes:

"The RBNZ still believes that the "Official Cash Rate (OCR) will remain at 1.75 percent for some time to come".

The outlook for GDP growth has been revised down slightly.

Nonetheless, GDP is expected to grow above potential over the projections, with capacity pressures expected to tighten further.

Today's Statement could be interpreted as more dovish than it might have been.

Putting equal odds of the next move being a cut or a hike in the first paragraph sends a strong signal to the market that the Bank is very comfortable on the fence.

We expect the next move in the OCR to be a hike and have penciled in August next year.

This outlook may be tested if we do not see a broadening in inflationary pressures, or if current global wobbles take a turn for the worse.

The RBNZ's sanguine global growth forecasts look to us like a key source of downside risk."