New Zealand RBNZ will likely keep the cash rate unchanged at 3.50% in June

The Reserve Bank of New Zealand (RBNZ) will announce its monetary policy decision on 11 June in a live meeting. Swap markets are pricing in a 46% chance of a 25bps rate cut. According to Standard Chartered, the cash rate to remain unchanged at 3.50% (in line with consensus), and assumes that  the RBNZ will retain the dovish statement from its April meeting. 


Q4-2014 and Q1-2015 inflation were lower than expected, both contracting q/q. Inflation may remain low through 2015, providing the RBNZ space to ease further. Governor Wheeler may reiterate that the New Zealand dollar (NZD) remains "unjustifiably high" despite a significant drop in dairy prices and that a "substantial downward correction in the real exchange rate is needed". The RBNZ is expected to cut rates by 25bps in H2-2015, adds Standard Chartered.