RBNZ: Market pricing currently implies 99% chance of a cut in August - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the market pricing currently implies a 99% chance of a cut in August - about as confident as a market can be.

Key Quotes

“The chance of another cut by the November MPS (September is an interim meeting) is 92% - also effectively fully priced.

Of all the changes in variables which are relevant to RBNZ monetary policy, the only one which is significant is the NZD exchange rate, the TWI being 7% above the RBNZ’s forecast.

The other changes such as inflation (weaker), housing market (stronger), GDP growth (stronger) and the rest, sum to a trivial impact. So the big question is how much the RBNZ will downgrade the 90 day interest rate projection by. Around 25bp would be unsurprising. Either 10bp or 40bp would probably move the market (swap rates and the NZD), up and down respectively.”