Credit Agricole Research discusses its expectations for tonight's RBNZ policy meeting.
"The RBNZ will remain on hold on Wednesday, which will leave the market’s focus on the RBNZ’s rhetoric and economic forecasts in its MPS. In terms of the central bank’s forecasts, they will likely be little changed. While inflation and GDP have surprised the RBNZ to the upside and leading indicators for the economy look firm, NZ is significantly exposed to the impacts of the coronavirus via its agricultural and tourism exports to China. The knock-on effects from the damage done to the Australian economy from the negative shocks of the coronavirus and bushfires will also hurt the NZ economy," CACIB notes.
"We expect the RBNZ to also keep a 50% chance of a 25bp OCR cut in the coming year in order to keep a lid on the NZD, which is trading above the RBNZ’s forecasts," CACIB adds.