MUFG Research discusses its reaction to this week's RBNZ policy meeting.
"The RBNZ decided to deliver a larger 50bps hike lifting the key policy rate to 1.50%...The RBNZ stated that “it is appropriate to tighten monetary conditions at pace” to meet their remit on price stability and maximum sustainable employment, and the MPC wanted to move the key policy rate to a “more neutral stance sooner”. The RBNZ’s current estimate of the neutral policy rate has been set at around 2.00%," MUFG notes.
"The New Zealand rate market expects the RBNZ to deliver one further 50bps hike at their next policy meeting on 25th May which would take it back to neutral policy settings. After which the RBNZ is expected to return to delivering smaller 25bps rate hikes in the second half of this year as it moves the policy rate into restrictive territory," MUFG adds.