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11 Mar 2013
Forex Flash: RBNZ to first hike rates in Dec 2013 - BNZ
The Reserve Bank of New Zealand will begin hiking rates in December this year and "the cash rate will then be progressively raised to a 'new neutral' of 4.5% in the following 15 months" notes Craig Ebert, analyst at the bank.
Craig expands: "This remains a more aggressive view than either the Reserve Bank’s outlook. Yet we remain quietly confident that inflationary pressures will build to justify this as (a) spare capacity in the domestic economy disappears, particularly with the onset of the expected construction boom and (b) the disinflationary pressure attributed to the currency begins to wane."
"It will take time for the data to provide justification for the market to adopt this view" Craig says, reminding us that "at the moment, the market is ascribing a 25% chance of a first hike in September and around a 60% chance of a hike by December."
Craig expands: "This remains a more aggressive view than either the Reserve Bank’s outlook. Yet we remain quietly confident that inflationary pressures will build to justify this as (a) spare capacity in the domestic economy disappears, particularly with the onset of the expected construction boom and (b) the disinflationary pressure attributed to the currency begins to wane."
"It will take time for the data to provide justification for the market to adopt this view" Craig says, reminding us that "at the moment, the market is ascribing a 25% chance of a first hike in September and around a 60% chance of a hike by December."