RBNZ likely to keep OCR on hold at 2.25 pct, likely to cut rate in June

The Reserve Bank of New Zealand is set to meet up next week for its monetary policy review. The central bank is expected to keep its OCR on hold at 2.25%.The recent developments, especially of the strengthening NZD, is unlikely to bring additional cut into play, according to ANZ.

Even though the developments in March roots for a possible reduction in rates, the central bank had highlighted its inclination to move on MPS. As for the NZD, it is unlikely that an additional reduction might significantly influence the currency’s direction, noted ANZ.

“We expect dovish nuances and a firm easing bias to remain (“further policy easing may be required”) – an implicit hat tip to NZD strength”, said ANZ.

Last month, the central bank stated that even if the IMF has lowered its global growth forecast, volatility in the global financial market has eased. It also mentioned that commodity prices are low, and the New Zealand economy continues to track growth as strong as the central bank forecast last month. Meanwhile, housing markets are growing throughout the nation amidst high debt levels, while headline inflation continues to be low. However, annual inflation is accelerating.

“We are nonetheless retaining our view that the OCR will indeed be lowered at some stage going forward. We put the probability of a June cut at 60%”, noted ANZ.