The New Zealand dollar is down ahead of the RBNZ interest rate decision, scheduled for release at the top of the hour. NZD/USD is down 70 pips on the day to 0.8242.
Wheeler was clear about what’s expected in the most recent decision:
OCR increases will likely be required next year. The extent and timing of the rise in policy rates will depend largely on the degree to which the momentum in the housing market and construction sector spills over into broader demand and inflation pressures. We expect to keep the OCR unchanged in 2013.
The thing is, the RBNZ doesn’t meet often and that statement was from September. One warning comes from Auckland-based advisory firm Redward Associates who sales lending restrictions are having a ‘material impact’ and that could lead the RBNZ to warn about fewer rate hikes next year.
At the moment, the OIS market implies about 110 basis points of tightening in New Zealand and a signal about less could send NZD sharply lower.
