Analysts at TD Securities explained that the NZD OIS is flat at the 1.75% official cash rate (OCR), then barely 50% priced for+25bp by February 2019.
Key Quotes:
"Consensus does not expect newly-minted RBNZ Governor Adrian Orr to hike until the middle of next year, at the earliest."
"We remain upbeat: the economy is tracking at an above-trend pace - and fully employed - ahead of the government's largest fiscal stimulus plan in years. Treasury continues to rake in record revenues, indicative of a strong economy."
"Higher minimum wages, 'free' first year tertiary education, Kiwibuild and $NZ2-3b in transfer payments are just four of the policy platforms underway or soon to be deployed.
On 10 May, RBNZ Governor Orr presides over his first Monetary Policy Statement(MPS) and press conference."
"We expect the pragmatic Governor to note that the economy is in good shape, although inflation remains weak. It may be too soon to confirm that the next move is up for the cash rate, but cannot be ruled out."
"This report is a summary of the discussion that we had with several North American real money investors (along with CAD and AUD). Our hawkish view was received with interest - could the markets be asleep at the wheel? This time last year no-one was expecting the Bank of Canada to hike either."
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