ASB Bank says markets have almost fully priced a 25bp RBNZ hike, leaving limited
scope for a hawkish surprise. ASB still expects at least one more rate increase
by year-end, with a terminal rate around 3.3%, slightly below current market
pricing. If realized, that could prompt modest dovish re-pricing in front-end NZ
yields and weigh on the NZD. ASB notes tightening financial conditions—including
a stronger trade-weighted NZD and higher swap rates—that the RBNZ is likely to
cite, reducing the case for an especially hawkish statement. With two-way risks
to medium-term inflation, money and rates markets will remain highly sensitive
to NZ data in the months ahead regardless of Wednesday's outcome.
