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RBNZ to hold fire until Q3 2015 - Standard Chartered

FXStreet (Bali) - Chidu Narayanan, Researcher at Standard Chartered, expects the RBNZ to hold rates until Q3-2015, where another 25bp is expected, ahead of an additional 25bp in Q4-2015, taking the cash rate to 4.0% from its current 3.5%.

Key Quotes

"The RBNZ was the first developed-market central bank to hike in this cycle, already delivering 100bps of hikes in 2014. Lower-than-expected inflation in Q2 allowed Governor Wheeler to abandon his hawkish stance and focus on the elevated currency, even threatening intervention if the currency remained “unsustainably” high."

"We expect the RBNZ to keep rates on hold for now as earlier hikes cool economic activity. We expect two further hikes of 25bps each in the current cycle, in Q3-2015 and Q4-2015, taking the cash rate to 4.0%. Markets expect only a 3% chance of a hike to 3.75% by the end of this year."

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