The RBNZ statement earlier hinted that rates could move in either direction
And central bank governor Adrian Orr reiterated that message here. They also pushed back their inflation forecast with the goal set to be reached in Q4 2020 now, from Q3 2020 before.
But despite the dovish stance, analysts still believe that the next move will be a rate hike:
Daniel Blake, strategist at Morgan Stanley
- Higher price growth over 2018 will spur rate hikes in 1Q19 - driven by a tight labor market, depreciating NZD, high oil prices and minimum wage increases
- Markets aren't pricing in a hike until 3Q19, which appears too late
- RBNZ has provided an estimate of the Non-Accelerating Inflation Rate of Unemployment (or full employment) at 4.7%, implying a positive unemployment gap
Sharon Zollner, chief economist at ANZ Bank New Zealand
- RBNZ's rate forecasts were barely changed from February, implying hikes from around mid-to-late 2019, far enough ahead that it can alter its strategy as conditions change
- Next OCR move will be a hike, as early as August 2019; view may be tested if a broadening in inflationary pressures fail to materialise, or if current global wobbles take a turn for the worse
- RBNZ's sanguine global growth forecasts look like a key source of downside risk
Nick Tuffley, chief economist at ASB Auckland
- RBNZ will probably remain on hold until at least August 2019 as there remains no urgency for the OCR to go up for some time
- Inflation outlook is now fractionally lower for the March 2019 year, which reinforces the slightly later start to the implied tightening cycle in the RBNZ's forecasts
