Westpac expects a “neutral” or “dovish” tone from the Reserve Bank of New Zealand (RBNZ) regarding the outlook for the Official Cash Rate (OCR).
According to Westpac, in its latest commentary, the chance of an OCR cut in the near future seems distant. Its central expectation is that the OCT will remain on hold until mid-2020.
“We expect an on-hold decision this week, and that the RBNZ will signal the OCR is set to remain at an expansionary level for a considerable time,” the bank stated. “However, there’s a bit more uncertainty regarding the tone of the policy statement.
“We expect it to be either neutral or dovish from a market point of view – we ascribe equal probabilities to either outcome,” it noted.
Westpac also noted the odds of an OCR cut over the coming year is at one in three.
The OCR has remained at 1.75% since November 2016, with RBNZ stating in August that it expects to keep the OCR at the same level throughout 2019 and into 2020.