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The Reserve Bank of New Zealand will announce its next monetary policy decision during the upcoming Asia-Pacific session. The announcement will be released on Wednesday at 4.00 pm. No change in rates is expected as inflation is very high.
What does the market expect?
The Bank of New Zealand is expected to keep rates unchanged, with the Official Cash Rate (OCR) at 5.50% for the sixth consecutive meeting. All economists surveyed by Bloomberg expected that outcome. Also, money markets are not pricing in any change in interest rates at tomorrow's meeting. New Zealand has not released any new inflation figures since the last meeting (it only publishes quarterly data), and this should come as no surprise as the latest reading was more than double the CPI's 4.7% year-on-year increase. Target of Bank of New Zealand.
Source: Bloomberg Finance LP
Investors will pay attention to the report
With the Bank of New Zealand deciding to cut rates highly unlikely and rates likely to remain unchanged, investors will focus on guidance. This may be rare due to the lack of new economic forecasts. Forecasts released by the central bank in February suggested the start of a rate-cutting cycle in February 2025 next year. The market may have been pricing in October, but those expectations were tempered last month and now in August. A meeting is scheduled. Seen as the time for the first rate cut. Investors will be looking for signs that the RBNZ is more confident about hitting its inflation target. However, since no new inflation data has been released since the last meeting, that clue may not be provided. There is a high probability that tomorrow's RBNZ rate decision is a non-event and we won't see any major changes in the NZD market. If the RBNZ report is a little more dovish than the previous one, the NZD could pull back a bit.
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