RBNZ Set To Deliver July Insurance Hike

ING anticipates a 25bp 'insurance' hike from the RBNZ on July 8th to anchor inflation expectations. However, declining oil prices have increased the risk that this will be a one-off move, capping potential NZD gains.

Key Takeaways

• 1.ING expects the Reserve Bank of New Zealand to deliver a 25bp 'insurance' hike to 2.50% at the July 8th meeting.
• 2.While the RBNZ is expected to hike, the risk that this is a one-off move has increased significantly due to falling oil prices.
• 3.A hawkish, one-off hike may limit NZD upside as the market may interpret the pause in further hikes as a policy error or shift in outlook.

Table of Contents

• RBNZ set to deliver July insurance hike
• May's rate projections largely invalidated by now
• But it's risky to disappoint markets
• RBNZ policy was accommodative before the Iran war
• An insurance hike, another one close to 50-50
• Less upside for NZD

Document Preview

Page 1 of 3

Subscribe for full accessStart Free Trial