MNI RBNZ Preview-Feb 2025: 50bp In Feb, Focus On OCR Path

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EXECUTIVE SUMMARY: 

• With the economy broadly developing as the RBNZ expected in November with core inflation “converging” to the mid-point of the band and “considerable spare capacity” persisting, another 50bp of easing on February 19 remains the central case. It had this size of cut in its November projections.
• RBNZ dated OIS pricing has 49bps of easing for Wednesday, with a cumulative 112bps by November 2025.
• The RBNZ will also publish updated staff forecasts this month and the revised OCR path will be of particular interest as the policy rate approaches the bank's estimated 2.5-3.5% range for neutral. Given weak growth and inflation around the band mid-point, the projections may show the OCR reaching 3% sooner than expected in November.
• With a 50bp cut unanimously expected for February 19, attention has already shifted to the monetary policy outlook for the April 9 and May 28 meetings. The updated forecasts, especially for the OCR, and whether the MPC is still looking to return to a “neutral world” will be important inputs into rate expectations.