PREVIEW: RBNZ Set For A Hawkish Decision, As “One Step Toward Policy Normalisation” - LS

The Reserve Bank of New Zealand (RBNZ) heads into this week's Monetary Policy Review to decide on the Official Cash Rate (OCR), which is generally expected to be a hike of 25bps. Analysts at TD Securities hold their call on a 25 basis points (bps) hike in July, conceding that the RBNZ may hike rates slower than forecast in April. However, they flagged that the hike may still leave monetary policy too accommodative, as GDP/inflation outcomes have tracked well above Bank forecasts since the 75bps cuts in October and November last year. Similarly, HSBC Economist Maitreyi Das noted that recent economic data have pointd to stronger-than-expected growth and firmer inflation. While GDP growth is expected to moderate in Q2, HSBC anticipates economic activity to recover by the second half of the year supported by developments following the recent US-Iran conflict. As a result, the bank forecasts a 25bp rate hike, describing it as one step towards policy normalisation. READ MORE