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4 Nov 2013
Flash: RBNZ rate hike cycle outlook - BNZ
FXstreet.com (Barcelona) - It is well known by market participants that the RBNZ is very likely to embark upon a tightening cycle starting in 2014, thought to be extended throughout 2 years. According to Kymberly Martin, Strategist at BNZ, there is equally balanced risks of seeing a first 25bps hike in June next year with a 4.50% peak in 2H 2015.
Key Quotes
"We are advocates of a good dose of healthy scepticism regarding any espoused view on the OCR. Our central OCR view (a first 25bps hike in June next year to a 4.50% peak in 2H 2015) sits amidst equally balanced risks."
"Our central scenario suggests modest hedging ‘value’ is beginning to re-appear after the pullback in swap yields seen in recent months. A downside scenario, however, could see apparent ‘value’ eliminated."
"But be aware plausible upside scenarios could see the OCR rise rapidly or peak at 5.00-5.25%. In those cases current swap rates provide fairly compelling hedging ‘value’. All these hedging strategies should be assessed with due scepticism. However that is quite different from complacency as a hedging strategy."
Key Quotes
"We are advocates of a good dose of healthy scepticism regarding any espoused view on the OCR. Our central OCR view (a first 25bps hike in June next year to a 4.50% peak in 2H 2015) sits amidst equally balanced risks."
"Our central scenario suggests modest hedging ‘value’ is beginning to re-appear after the pullback in swap yields seen in recent months. A downside scenario, however, could see apparent ‘value’ eliminated."
"But be aware plausible upside scenarios could see the OCR rise rapidly or peak at 5.00-5.25%. In those cases current swap rates provide fairly compelling hedging ‘value’. All these hedging strategies should be assessed with due scepticism. However that is quite different from complacency as a hedging strategy."