RBNZ likely to keep key interest rates unchanged at record low, says Commerzbank

The Reserve Bank of New Zealand is expected to stay pat again during its meeting on Thursday. According to a Commerzbank research report, the RBNZ is likely to keep its key interest rate on hold at the record low of 1.75 percent. Given the recently encouraging development in inflation, certain market participants might expect generally more hawkish comments from the central bank, if not even for hints of an imminent normalization of interest rates.

Inflation in the nation returned to the midpoint of its target range of 1 percent to 3 percent much more rapidly than the central bank had anticipated. Moreover, the New Zealand dollar has been weakening further on a trade weighted basis, thereby underpinning the positive inflation trend.

“However, it is exactly this NZD depreciation trend that the RBNZ will not want to put at risk yet so that we expect it to stick to its cautious tone”, added Commerzbank.