STIR: RBNZ-Dated OIS Extends Post-RBNZ Firming
RBNZ-dated OIS pricing is 10-13bps higher across meetings compared to yesterday’s pre-RBNZ decision levels.
- RBNZ Governor Hawkesby just spoke with Bloomberg today and reiterated that the message at yesterday’s press conference was not to assume that a July rate cut is programmed into the MPC’s thinking.
- Elevated uncertainty means that there could be many different paths from here, which is why the central bank presented different scenarios in its May Monetary Policy Statement.
- For instance, if current trade events result in higher costs and NZ price pressures rise, then the OCR is unlikely to move much from where it is in the ‘neutral zone’, but if weaker global demand reduces inflation, then there is room to cut. Thus, he said that the MPC will make “considered, data-dependent steps” and that markets should also follow developments closely.
- Markets had fully priced in yesterday’s 25bp cut ahead of the decision, with a total of 64bps of easing expected by November 2025. That has now adjusted to 50bps, inclusive of yesterday’s move.
Figure 1: RBNZ Dated OIS Today vs. Pre-RBNZ Levels (%)
Source: MNI - Market News / Bloomberg
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