Synopsis:
CIBC expects the RBNZ to continue cutting rates in a steady fashion, with 25bp moves in both April and May following February’s surprise 50bp cut. The recent resignation of Governor Orr is not expected to disrupt the easing cycle, and NZD/USD is seen holding near 0.58 in Q2 as markets digest Fed policy and broader USD trends.
Key Points:
1️⃣ RBNZ Easing Continues Despite Leadership Change 🔧
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Governor Orr’s sudden resignation came as a surprise, reportedly due to political pressure over past policy choices.
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Deputy Governor Hawkes steps in as interim chief, maintaining policy continuity.
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The RBNZ remains committed to gradual 25bp cuts, with explicit guidance for April and May.
2️⃣ Market Pricing Leaves Little Room for Further Dovish Surprises 🧭
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With 50bps of easing priced in, additional NZD downside may be limited.
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A revision of the 3.00% terminal rate lower is unlikely, suggesting scope for policy stability.
3️⃣ NZD/USD to Stay Rangebound with Mild Upside Bias 📈
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With US dollar strength expected to moderate, NZD could see modest appreciation.
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CIBC forecasts NZD/USD at 0.58 through Q2.
Conclusion:
CIBC sees RBNZ easing as well-telegraphed and orderly, limiting scope for fresh NZD downside. With policy uncertainty contained post-Orr, and the Fed expected to ease later this year, NZD/USD is likely to remain steady, supported by a mild softening in USD. Target: 0.58 in Q2.
