New Zealand - RBNZ won’t be perturbed by the weak GDP figures

Although the first-quarter GDP growth figures were notably weaker than the RBNZ had expected, the Bank will almost certainly keep the official cash rate (OCR) on hold at 1.75% at its monetary policy meeting on Thursday 22^nd June. Looking ahead, we expect that the RBNZ will keep the OCR at 1.75% throughout this year and next as it waits for evidence of a sustained rise in inflationary pressures. As such, we believe that the financial markets have not gone far enough in paring back their expectations of rate hikes in the near-term.