A piece in the NZ press argues that the Reserve Bank of New Zealand will cut rates in November
It cites RBNZ Assistant Governor McDermott speech on Tuesday 'Understanding Low Inflation in New Zealand' and says (bolding mine):
- The OIS market gained further conviction that the RBNZ would cut rates next month, following the RBNZ's McDermott's speech on Tuesday afternoon.
- The 10-Nov contract closed at 1.79%, suggesting that the market thinks it's pretty much a done deal.
- We agree.
- It would be awkward for the RBNZ to backtrack from this now, even with a positive CPI surprise next week.
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ps. I posted Tuesday on the speech here
and followed up later that day with:
- NZD came in for particularly hard selling later in the session, with the release of a speech on inflation from RBNZ Assistant Governor McDermott in which he said (amongst other things) that further policy easing will be required. Pretty blunt. The NZD had been weak (as I said) but a further 40 points was sliced from NZD/USD quickly after this.
"Pretty blunt" ... in the world of central banker-speak McDermott was a crystal clear as he could be - he couldn't have made his point better if he had hit you with a sledgehammer.
