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RBNZ Expected To Remain On Hold Next Week

Data Flash (New Zealand)


* Our central call remains that the RBNZ will move to a tightening bias when it releases its Monetary Policy Statement (MPS) on 20 March, but not actually raise the Overnight Cash Rate (OCR) until the middle of May.

* Only a minority of analysts is expecting a move before May, but, at the time of writing, the market was pricing approximately a 35% chance of a 25 bps hike next week and a 100% chance of a move on or before the interim OCR review on 17 April.

* Market pricing has become more aggressive on the back of the strong run of global data and, more importantly, continued evidence of a buoyant domestic economy.

* Over the past few weeks that included a further 0.5% mom rise in retail sales in January (which took the yoy rate above 9%), a 6.2% mom rebound in job advertisements in February, a strong recovery bound in tourist arrivals, as well as record inward migration which continues to put pressure on the housing market.

Ulf Schoefisch, Chief Economist


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