OCR: What the economists (and someone else) said
BNZ - Stephen Toplis
We saw nothing today to change our view that this tightening cycle has a long way to run before it’s all over and done with. July will be the next step along the way, September a pause and the track from thereon will be highly data dependent, with the currency the variable of most interest to us.
We were not disappointed. Perhaps the only surprise was that the Bank didn’t make more of the dependence of the interest rate track on the currency. Be that as it may, there is a clear reflection of the interdependence of these variables throughout the forecast document.
Nonetheless, the statement was definitely more hawkish than the market was anticipating as participants were looking for the RBNZ to signal some sort of respite from the tightening cycle based on the perception of a recent softening in domestic data.
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