RBNZ Preview: to remain in wait-and-see mode
|- RBNZ largely expected to main the OCR unchanged at 1.75%.
- Fed's decision ahead of the event to overshadow RBNZ outcome.
The Reserve Bank of New Zealand is having its monetary policy meeting early Thursday's Asian session, largely foreseen to leave the Official Cash Rate (OCR) on hold, despite recent strong economic data. The current rate stands at 1.75%, and the market sees little chances of a change at least until the end of 2019 or the beginning of 2020.
In its August statement, Governor Adrian Orr repeated that the next move could be up or down, and offered a mild dovish statement. This time, however, markets are expecting a less-negative stance, but still far from hawkish. Most analysts think that policymakers could review the near-term inflation outlook to the upside. Nevertheless, the central bank will likely keep a cautious stance, and also repeat that overall monetary conditions will remain accommodative, maintaining a wait-and-see stance.
Ahead of the event, the US Federal Reserve will unveil its latest decisions on monetary policy, and market's reactions to the RBNZ will be clearly overshadowed by dollar's strength or weakness post-Fed. Unless the New Zealand Central Bank surprises big something highly unlikely, the NZD has little chances of appreciating on Orr & Co. and will only surge on prevalent dollar's weakness, should the Fed disappoint. Gains on a positive shift in the wording could exacerbate the move if the dollar is weak, while will probably be short-lived is the USD heads strong into the release.
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