2018.06.2707:50:00UTC+00Westpac: RBNZ To Hold OCR At 1.75%, Maintain Previous Guidance

Imre Speizer, a currency market strategist at the Westpac Institutional Bank, expects the Reserve Bank of New Zealand to hold its benchmark interest rate at 1.75 percent on Thursday.

The central bank is also expected to maintain its previous guidance, which should be market-neutral.

The previous guidance is that the OCR is expected to remain on hold for a long while, with timing and direction of the next move dependent on how the economy evolves.

"The style of the one-page release may change, making it difficult to compare the narrative with the previous, such that brief market volatility could ensue," Speizer said in a note.

The key policy paragraph in May read: "The direction of our next move is equally balanced, up or down. Only time and events will tell".

"If this is retained (our neutral scenario), then markets should be unmoved," the strategist added.

If the RBNZ press release paints a slightly more hawkish picture than in May, Speizer expects a 0.5c rise in NZD/USD, and a fall of 0.25c if it gives a dovish scenario.