This week’s domestic calendar highlight is the RBNZ Policy Decision on Wednesday. Consensus is unanimous in expecting the OCR to be left unchanged at 5.50%.

• (Bloomberg) Shadow Board members recommended the Reserve Bank keep the Official Cash Rate at 5.5% this week. Members “agreed that inflation was easing, but there was uncertainty over whether the pace of this easing would be enough to bring annual CPI inflation back within the inflation target band over the coming year”: NZIER
• According to RBNZ dated OIS pricing, there is only a 4% probability assigned to a 25bp rate hike this week. However, what stands out more prominently is the indication that a cumulative easing of 62bps is still priced in by year-end.

Figure 1: RBNZ Dated OIS Pricing (%)

Source: MNI – Market News / Bloomberg