29 Mar 2016
NZD: Monetary policy outlook – Westpac
Imre Speizer, Senior Market Strategist at Westpac, suggests that market pricing for the OCR low has been fairly stable over the past week at 1.89%.
Key Quotes
“There was no major NZ economic news last week, and nor will there be this week. Thus, unless we get an offshore-sourced shock to markets, market pricing probably won’t move too much during the week ahead. That pricing also has an April cut at around a 30% chance.
Swap Yield Outlook
1 week: We see the 2yr sitting in a 2.20%-2.30% range during the next few weeks, with a 2% OCR fully priced and no major NZ economic news on the horizon.
3 months: Should settle around 2.20%, based on a terminal OCR of 2.0% and a risk premium of 20bp. A genuine indication of core inflation will be the Q1 print in April, a low outturn likely to catalyse the RBNZ in cutting again as planned.
1 year: Our macro-economic forecast sees the 2yr at 2.20% in a year’s time, assuming the OCR is at 2.0% by then.”
Key Quotes
“There was no major NZ economic news last week, and nor will there be this week. Thus, unless we get an offshore-sourced shock to markets, market pricing probably won’t move too much during the week ahead. That pricing also has an April cut at around a 30% chance.
Swap Yield Outlook
1 week: We see the 2yr sitting in a 2.20%-2.30% range during the next few weeks, with a 2% OCR fully priced and no major NZ economic news on the horizon.
3 months: Should settle around 2.20%, based on a terminal OCR of 2.0% and a risk premium of 20bp. A genuine indication of core inflation will be the Q1 print in April, a low outturn likely to catalyse the RBNZ in cutting again as planned.
1 year: Our macro-economic forecast sees the 2yr at 2.20% in a year’s time, assuming the OCR is at 2.0% by then.”