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Oct 07 - 06:55 PM

MUFG: What We Expect from this Week's RBNZ Policy Meeting

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:

  • 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.
  • 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).
  • 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

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