New Zealand RBNZ likely to keep the cash rate at 3.50% in April

The Reserve Bank of New Zealand (RBNZ) will announce its monetary policy decision on 30 April. It is expected to keep the cash rate unchanged at 3.50% (in line with consensus) but remain dovish; swap markets price in a 94% chance of no change.

Assistant Governor McDermott has noted that the inflation outlook remains subdued and that the RBNZ intends to ensure stimulatory monetary policy. 

Q1 inflation was lower than expected at -0.3% q/q (0.1% y/y) and is likely to remain low in 2015, allowing the RBNZ to ease further. 

Governor Wheeler is expected to reiterate that the New Zealand dollar remains "unjustifiably high", despite the significant drop in dairy prices, and that a 'substantial downward correction in the real exchange rate is needed'.

"We expect the RBNZ's next move to be a 25bps rate cut in H2-2015.", Said Standard Chartered in a report on Tuesday