RBNZ: August rate cut should support a lift in inflation expectations

• Market pricing for RBNZ is for 22bp of easing on 13 November.
• August rate cut "should support a lift in inflation expectations and an eventual lift in actual inflation."

Reserve Bank of New Zealand has said that it felt an August rate cut "should support a lift in inflation expectations and an eventual lift in actual inflation."

• August rate decision a reminder to the market to focus first and foremost to analyse the incoming data and information for ‘what we should do'.

Additionally, the Reserve Bank of New Zealand’s Assistant Governor and General Manager of Economics, Financial Markets and Banking, Christian Hawkesby, spoke at the 11th Annual Commonwealth Bank Global Markets Conference, in Sydney on Monday 28 October, 2019.

“There is a greater expectation from the public that information is easily available and understandable. This has resulted in a wider and deeper engagement with financial markets and society as a whole, with more speeches and publications increasingly used to provide perspectives,”

 - Mr Hawkesby said.

FX implications

NZD/USD is prone to the downside on the notion that the RBNZ remains dovish and monitoring the data, for additional easing will likely see flows away from the Kiwi – The central bank has shown it will act when required – "Market pricing for RBNZ is for 22bp of easing on 13 November, with a terminal rate of 0.61%," analysts at Westpac noted.