EXECUTIVE SUMMARY: * At tomorrow's RBNZ meeting the central bank is widely
expected to keep rates on hold. The Bloomberg survey of sell-side economists
shows all 22 economists see the policy rate being held at 2.25%. Our strong bias
is also for no change tomorrow. If realized, this will leave the focus firmly on
the outlook, particular on the RBNZ's new OCR path. The other focus point will
be gauging new RBNZ Governor Breman's tone, as this will be her first rate
setting meeting in charge. * The RBNZ will also likely be cautious around
sounding too hawkish around the outlook, which the market will likely judge via
the implied OCR outlook path. We would be surprised if the OCR path is more
hawkish than current market pricing, which implies a policy rate near 2.65% by
year's end (versus the current rate of 2.25%). The NZD TWI is up over 4% from
Nov 2025 lows, while local rates have also risen. A further material tightening
of financial conditions could put the economic recovery in jeopardy. This is
also where Breman's tone is likely to be watched closely in terms of keeping the
policy outlook flexible. FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING
LINK:RBNZ Preview - Feb 2026.pdf:
https://media.marketnews.com/RBNZ_Preview_Feb_2026_2056d416c2.pdf
Feb-17 02:35
