The Reserve Bank of New Zealand’s policy decision is expected mid-week. NZD overview and implications.

TD expects a +50bp rate hike from the Reserve Bank of New Zealand this week.

• The consensus is for +50 as well.

The decision is expected at 01:00 GMT on Wednesday February 22, 2023:

• 2:00 p.m. local time in New Zealand
• 8:00 p.m. EST on Tuesday, February 21.

RBNZ Governor Orr will follow up on his press conference an hour later.

Snippet preview via TD:

• After a historic 75 basis point rise at the November meeting, subsequent inflation and labor market results below RBNZ forecast support a return to the upside of the RBNZ in clips of 50 basis points. base. The slowdown would also be consistent with global central banks slowing the pace of increases.
• New economic projections will accompany the Board’s decision, with a focus on whether the Bank maintains a peak OCR of 5.5% by May.

Impact on the New Zealand dollar:

We don’t think the RBNZ will do the NZD a lot of favors at its February meeting, especially as market prices look a bit aggressive. The recent correction in the Chinese reflation theme has also weighed on regional assets, including the NZD.

note the steep price discount on NZDJPY, where GMPCA is pricing the cross at 89.78, implying a tactical opportunity to look into an RBNZ-inspired decline.

(GMPCA is TD’s own model)

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Earlier: