ANZ Research discusses its expectations for tonight's RBNZ policy meeting.
"The market is tilted in favour of a 25bp cut, in line with our expectations. But the RBNZ’s forward guidance will be important and will dictate moves in the aftermath of the decision.
Overall, data developments don’t suggest that the RBNZ need to be extremely dovish at this November MPS, but they’ll be wary – not wanting to undo the work they’ve done in the past year easing monetary conditions – and cognisant that the February MPS is a long time away," ANZ notes.
"Putting it all together, we expect that the RBNZ will leave the door ajar to an OCR below 0.75%, with the rate track dipping a smidgen below that and some equivalent words about standing ready to respond to events as they evolve. There’s no need to signal further cuts are likely, but slamming the door shut would risk an unhelpfully hawkish market reaction and tightening in financial conditions – which would be particularly unhelpful when the RBNZ’s next scheduled OCR decision isn’t until February 2020," ANZ adds.