One and done, latest rates call

The market is expecting the OCR to rise more slowly<br /> than what the Reserve Bank forecasts show

It says that “amidst the negativity some are focusing on, there are still massive positives (in the economy).”

But it also points out the economic story looks less picture perfect, but that needs to be put in perspective: it never was.

The economy is now settling into a glide-path expansion, which naturally sees more oscillation in indicators. Amidst the negativity some are focusing on, there are still massive positives. With demand still outpacing supply, the RBNZ has more work to do, and if we were them we certainly wouldn’t be closing the door on a July hike in the upcoming Monetary Policy Statement. In the wake of the small adjustments to the Fonterra payout, this week’s commodity price data will set the tone. While the direction of recent commodity price and confidence readings has been downwards, levels clearly matter in terms of the impact on inflationary pressure and the amount of work the RBNZ has to do. Data inputs for Q1 GDP are expected to convey a reasonable pace of base momentum, but with sector differences.

In the latest weekly Market Watch ANZ says the “economic story no longer looks so picture perfect.”