Reserve Bank of New Zealand meet Wednesday – on hold expected – preview

Coming up at 2pm New Zealand time on Wednesday, 16 August 2023 is the RBNZ policy decision.

• 0200 GMT and 10pm US Eastern time (on Tuesday, 15 August 2023)
• RBNZ Governor Orr’s press conference will follow an hour later

Preview comments via ANZ:

• We expect the RBNZ will leave the OCR unchanged at 5.50%, reiterating their ‘watch, worry and wait’ stance.
• Data since the July nothing-to-see-here Monetary Policy Review has been mixed, with relatively resilient demand but inflation indicators falling according to the script – an attractive mix, but one of questionable sustainability.
• As always, there’s a huge amount of wiggle room in terms of how the Committee interprets the implications of the recent data flow. We don’t expect a hat-tip to the chance of more hikes in this Statement, but the OCR forecast may show rates remaining at their peak for a little longer.

And via Westpac:

• The RBNZ will keep the OCR at 5.50% at its August policy meeting and retain its baseline forecast that the rate cycle has peaked.
• The Bank’s forecast for the OCR should continue to indicate rates on hold until August 2024, falling slowly thereafter.
• Economic developments will likely be viewed as broadly mixed and so will likely lead to only modest changes in the Bank’s growth and inflation forecasts. Weaker than expected March quarter GDP and a softer outlook for the external sector are balanced against a firmer housing market and persistent domestic inflation pressures. The Bank will likely emphasise that any future move in policy will depend on the emerging data flow at home and abroad.

KiwiBank:

• The RBNZ … will most likely keep the cash rate unchanged at 5.5%.
• But it’s all about the outlook, and the fresh set of forecasts. We expect to see some minor tweaks to the RBNZ’s forecasts. And it’s a watch, wait and worry approach.
  
• The RBNZ’s intent will be made crystal clear in the OCR track – a two year forecast of the cash rate. We expect the OCR track to remain unchanged. The track shows the cash rate remaining at 5.5% (no more hikes) well into 2024, with the next move being a rate cut.
• 
  The war on inflation is far from over. So we’d expect to see some stern words on this front. The good news is there should be no more rate hikes. And inflation is cooling offshore. The bad news, rate cuts are still a ways away.

KiwiBank graph: