TD Research discusses its expectations for this week's RBNZ policy decision on Wednesday including the NZD. The market is pricing in an 87% chance of 25 bps and 13% chance of 50 bps.
"We expect the RBNZ to hike its official cash rate (OCR) by 25bps at its April meeting to 5.00%, scaling down from its outsized moves in the past few meetings.. Despite the banking turmoil, it's unlikely the RBNZ will have cause for concern over NZ banks given they are 1) operating above minimum regulatory requirements and 2) have undergone rigorous stress," TD notes.
"With the Fed getting much closer to a terminal rate, the drag on the NZD should ease. But with downside risks growing to our 5.50% terminal call for the RBNZ, we think NZD may still consolidate further," TD adds.
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