Flash: RBNZ likely to hold fire until 24 April OCR review - RBS

FXstreet.com (Barcelona) - According to Greg Gibbs, FX Strategist at RBS, the RBNZ is likely to hold its fire on rates until the 24 April OCR review, however, risks remain that the RBNZ moves first either at the 13 March MPS, or waits until the 12 June MPS.

Key Quotes

"The RBNZ does appear to have a mild preference toward favouring policy changes on MPS dates (quarterly) over the intermediate OCR reviews."

"The RBNZ is expressing some increased sensitivity to the exchange rate, and its performance could significantly alter the timing and extent of policy hikes."

"While the RBNZ may delay its first hike until Q2 there are reasons to be wary of an earlier hike, and the evidence suggests that
while historically high, the NZD is not over-valued."

"Key elements in the delivery or not of these hikes will be the strength of the housing market and the strength of the exchange rate. If the LVR restrictions appear to be more effective in cooling the housing market, or the NZD is stronger and points to lower inflation outcomes, the RBNZ will be inclined to delay policy tightening further than the current forecast trajectory."