RBNZ policy rate not going anywhere for a long time - Westpac

In view of analysts at Westpac, the Q2 CPI disappointment strengthens the RBNZ’s case for remaining on hold this year and next. 

Key Quotes

“Markets are still clinging to the view that the RBNZ will hike by August 2018.”

“Our own view is closer to the RBNZ’s, suggesting little upside to NZ interest rates for maturities up to 3yrs.”

“The rise in AU interest rates relative to NZ’s, plus AU commodity outperformance during the past month, have ignited an impressive rally in AUD/NZD.”

“At 1.08, the cross is not far from model fair value at 1.09. We expect dairy prices to remain stable, so that further gains in iron ore could see the cross reach fair value.”