MUFG Research discusses NZD outlook around this week's RBNZ policy meeting.
"The vast majority (19/22) of economists surveyed by Bloomberg expect the RBNZ to deliver another 50bp rate hike this week lifting their key policy rate to 2.00%. The RBNZ is then expected to slow the pace of rate hikes at the four remaining meetings for this year by delivering 25bps hikes at each meeting. Market participants in the New Zealand rate market are not as convinced that the RBNZ will slow down the pace of hikes after delivering a final 50bps hike his week," MUFG notes.
"The New Zealand rate market is pricing in around 54bps of hikes for this week, 88bps by July and 127bp by August. Market participants expect at least one more 50bps hike over the summer. The performance of the New Zealand dollar in response to this week’s policy meeting will likely depend upon whether the RBNZ signals that further larger 50bps hikes are likely at upcoming policy meetings. Without such a hawkish policy signal, the kiwi is vulnerable to disappointment," MUFG adds.