Outlook for Borrowers: Post February MPS
The Reserve Bank of New Zealand (RBNZ) held the Official Cash Rate (OCR) steady at 2.25% at the Monetary Policy Statement (MPS) on Wednesday. This outcome was expected by economists and fully reflected in market pricing. The decision was reached by consensus. The updated modelled OCR track has a low point of 2.25% removing the marginal easing bias from November. The December quarter average was increased by 10bp to 2.38%, implying a greater chance of a rate hike towards the end of this year. The projected track for next year was also revised higher and the OCR reaches the Bank’s 3% long term neutral estimate by late 2028.
Post-HYEFU NZGB Supply Update
New Zealand Debt Management (NZDM) updated the bond programme today, alongside the Half Year Economic and Fiscal Update (HYEFU). Gross NZ Government Bond (NZGB) issuance has been increased by a total of NZ$3 billion over the forecast period to June 2029, compared with the Budget Economic and Fiscal Update (BEFU) in May. The 2029/30 year has been added, and gross issuance for that year is forecast to be NZ$30 billion.
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