RBNZ Preview: Five major banks expectations


The Reserve Bank of New Zealand (RBNZ) will announce its monetary policy decision on 24 June at 02:00 GMT. The market consensus is for the RBNZ to stay on hold and as we get closer to the release time, here are the expectations forecast by the economists and researchers of five major banks regarding the upcoming central bank's meeting.

Standard Chartered

“We do not expect major policy changes, as the RBNZ frontloaded its QE announcements in May, substantially expanding the Large Scale Asset Purchase (LSAP) programme, leaving little room for further near-term increases. We see room for the RBNZ to expand QE by another NZD 11 billion (including the NZD 4 billion increase in the 2019/2020 bond issuance programme) until it hits the indemnity cap on NZGBs. That said, the RBNZ will likely reiterate its dovish tone and willingness to use all policy tools (including negative rates). We would watch for the RBNZ’s assessment of banks’ preparedness to cope with negative interest rates and a change in its view on the COVID-19 impact from a shorter-term shock to a lasting contraction. We would also watch for its comments on the NZD, which has appreciated since the May meeting.” 

Westpac

“We expect the RBNZ to keep its monetary policy stance unchanged. We expect that the weekly pace of bond-buying under the LSAP will stay slightly above $1 billion for the foreseeable future. The RBNZ will have to lift the $60 billion cap on the LSAP at some point, just to allow headroom for that pace of bond buying to continue. There is a chance that the cap will rise to $70 billion next week. But more likely, the RBNZ will leave the cap unchanged this time, and lift it to $80 billion in August in a single hit. The RBNZ is likely to reiterate that it has other monetary tools available, but will not signal that these are necessary at this point.”

ANZ

“We expect the RBNZ to leave the OCR unchanged at 0.25%. The RBNZ will acknowledge the positive surprise that NZ exited Level 2 lockdown much faster than they had assumed, but will be at pains to point out that beyond that, the outlook remains extremely challenging.   We expect the RBNZ will emphasise that they stand ready to act further if required, mirroring the Fed’s tone. We expect the RBNZ LSAP program to be further expanded to a cap of $90 billion by August, but there is no need to act now.  The RBNZ would likely prefer the currency to be lower. But with New Zealand a relative ‘good news story’ and risk appetite still elevated, any jaw-boning is unlikely to have a lasting impact.”

ING

“New Zealand’s strong relative position and favourable outlook from 3Q20 onwards suggest that the RBNZ will not need to deliver any meaningful changes to its policy stance. But given the volatility of the kiwi in recent weeks, Governor Orr may wish to convey the impression at that meeting that all options remain open to the RBNZ, in order to keep the NZD from appreciating too much (even if the reality is that there is little need for further incremental easing through expanded LSAP or adoption of alternative policies such as negative interest rates). If indeed the RBNZ adjusts its rethoric with the aim of putting a lid on the NZD, we see the balance of risks for the currency as tilted to the downside in the aftermath of the meeting. Stepping away from the short-term impact, there is a significant risk that the threat of negative rates may not be enough to keep NZD appreciation contained. As we do not expect any more rate cut to be ultimately delivered, we cannot exclude the possibility that the RBNZ will attempt to step in against the NZD with other - and possibly more direct - measures.”  

TDS

“Expect the RBNZ to keep the cash rate on hold at 0.25%. The Bank is likely to acknowledge a quicker than expected unwind of restrictions but highlight global risks remain. As such it's likely to reaffirm it's prepared to use additional monetary policy tools if and when needed. There may be some scope to talk down NZD strength. Meanwhile, we don't expect an LSAP increase.”

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD remains vulnerable near 1.1600 amid firmer dollar

EUR/USD is hovering around 1.1600, on the defensive amid a broadly stronger US dollar. Markets cheer US-Sino talks and stimulus progress despite looming inflation fears. The Fed-ECB monetary policy divergence weighs down on the euro. US Consumer Confidence data awaited.

EUR/USD News

GBP/USD hovers around 1.3750, Brexit talks in London eyed

GBP/USD is trading above 1.3750, struggling for a clear direction after Monday’s rebound. Market sentiment improves on stimulus hopes, US-Sino talks but the dollar remains firmer. UK’s Frost offers EU December deadline to solve the row over the NI proposal. All eyes on the Brexit talks in London.

GBP/USD News

Acceptance above 100/200-day SMAs favours XAU/USD bulls

Gold regained positive traction on Monday and inched back closer to multi-week tops. Fresh COVID-19 jitters benefitted the safe-haven metal. A stronger USD, hawkish central bank outlooks kept a lid on any meaningful upside.

Gold News

Traders book profits from Shiba Inu to push Dogecoin to $0.34

Dogecoin price could see some incoming speculative money from profit-taking in Shiba Inu A bullish close above the Cloud on the daily chart indicates future upswing likely. The outperformance of Shiba Inu is likely as Dogecoin lags the majority of the market.

Read more

Conference Board Consumer Confidence October Preview: Watch what we do... Premium

Confidence expected to slip to 108.3 from 109.3 in September. Michigan Consumer Sentiment eroded slightly in October. Sentiment seems divorced from labor market and Retail Sales. Federal Reserve taper will not hinge on a happy US consumer.

Read more

Forex MAJORS

Cryptocurrencies

Signatures