The Reserve Bank of New Zealand (RBNZ) kept its cash rate at 2.5% today, as was widely anticipated. Post-earthquake rebuilding over the next few years will lift local price pressures and so the RBNZ still expects to hike once external economic and financial risks diminish. Participants in the swap market have moved towards our forecast that the RBNZ will wait until March to hike its cash rate, but it is increasingly likely that weak global conditions will extend the pause for even longer.
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