By eFXdata — Oct 07 - 03:00 PM
Synopsis:
MUFG expects the Reserve Bank of New Zealand (RBNZ) to implement a significant 50bps rate cut in its upcoming policy meeting, reflecting the central bank's need to align with market expectations for aggressive easing.
Key Points:
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Expected Rate Cut:
- The RBNZ is anticipated to increase the pace of its easing cycle, following a 25bps cut in August, by implementing a larger 50bps cut this week and another 50bps in November.
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Market Expectations:
- The central bank must adopt a dovish stance to meet heightened market expectations for more aggressive rate reductions.
- Failure to deliver on these expectations could result in disappointment and a subsequent impact on the New Zealand dollar (NZD).
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Potential for a Relief Rally:
- Should the RBNZ's decision fall short of market anticipations regarding the extent of easing, the kiwi may experience a temporary relief rally.
Conclusion:
As the RBNZ prepares for its policy update, MUFG's outlook points towards a decisive shift in monetary policy with a 50bps cut expected. This move is crucial for aligning with market expectations, and any deviation from this forecast could lead to volatility in the NZD.
Source:
MUFG Research/Market Commentary