Economists at TD Securities expect the Reserve Bank of New Zealand (RBNZ) to hike consecutively in 50 basis points (bps) clips at its April and May meetings. The 4% terminal is expected to be reached in February 2023.
“Our new forecasts have the RBNZ hiking in 50 bps clips at the July, Aug and Oct'22 meetings with 25 bps hikes in Nov'22 and Feb'23. This takes the year-end 2022 OCR to 3.75% and the final hike in Feb'23 takes the terminal rate to 4%.”
“We discuss the upside and downside risks to our 4% terminal call and it rests heavily on how the RBNZ prirotises the Growth vs inflation outlook.”
“From a market's perspective, a deterioration in market liquidity could bring an early end to the tightening cycle.”
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