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RBNZ will try to steer a middle ground this week - BNZ

FXStreet (Bali) - BNZ Economists believe that the RBNZ will try to steer a middle ground this week, delaying its next rate hike into early 2015.

Key Quotes

"We believe the RBNZ will temper its OCR outlook at Thursday’s Monetary Policy Statement (MPS). But deliver a statement that is too dovish and the Bank risks losing the initiative that it had only just begun to get on term/retail interest rates.. Come across too hawkish, however, and it risks a credibility issue – given the less-exuberant growth indicators, and less-threatening inflation gauges, of late. A firm-minded RBNZ (a la its June MPS) could also support the currency unduly."

"We thus believe the Reserve Bank will try to steer a middle ground this week – delaying its next rate hike into early 2015 while still projecting a cash rate back to at least neutral (4.5%) by the end of the forecast period. In any case, expect the central bank officials to express increased discomfort with a NZD that’s failing to play ball with the size of the terms of trade correction underway."

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