Week Ahead: A Plethora Of Data, An RBNZ Meeting, But Focus On Fed Minutes
XM Group | Aug 12, 2022 08:40AM ET
RBNZ leading the tightening race
The Reserve Bank of New Zealand is tipped to lift its official cash rate (OCR) for the seventh straight meeting on Wednesday, becoming the first major central bank to take borrowing costs as high as 3% in this cycle. However, the hawkish posturing may be reaching the end of the line and there are downside risks for the New Zealand dollar from the meeting.
Back in May, the Bank had forecast that the OCR would peak just below 4% by September 2023. That means there would only be a 100-basis-point increase remaining if it hikes rates by 50 bps in August as expected. But that is assuming that the rate path doesn’t get revised lower.
With neither the CPI figures on Wednesday, nor Friday’s retail sales estimates likely providing much cheer, there might be some good news from Tuesday’s labour market report, as the unemployment rate is expected to have held steady at 3.8% in the three months to June.
Although strong employment numbers might offer some support to sterling, another jump in CPI would probably heighten the risk of stagflation following the contraction in UK GDP in the second quarter, weighing on the currency.
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