With the August meeting covid jitters now behind the RBNZ, the coast is clear for them to start their planned hiking cycle with a 25-basis point hike in the week ahead.
Recall at the August meeting the bank was put between a rock and a hard place. Even though the economic outlook allowed them to start hiking rates, the optics of hiking rates just as the country went back into lockdown kept them from following through.
Thus, with the economy still strong and the country now sitting at a vaccination rate of over 60%, that should give them enough confidence to hike rates this week, with money markets pricing in close to a 100% chance of a hike this week.
Thus, with a hike fully priced in, the market’s attention will turn to the banks’ overall tone and language to see whether they stick to their upbeat tone, or whether recent developments around the globe causes a more sober stance.
As always, more on this and how we look to take advantage of that in our week ahead video.