Rabobank - "Not a single forecaster on the Bloomberg survey expects anything other than steady rates from the RBNZ this week. However, with New Zealand currently in pole position to be the first G10 country to suffer a rate hike this cycle, there will be plenty of attention steered towards the quarterly Monetary Policy Statement. A key element of this report will be the Bank’s outlook on the housing market. Back in the December Statement the RBNZ warned that “if the housing market continues to gather momentum, there is a risk of a stronger pick-up in household credit and further increase in house price inflation. Such developments would have implications for the appropriate stance of monetary policy.
(...) The tightening in monetary conditions implied by the strong NZD on top of the fiscal tightening should allow the RBNZ a little more breathing room before interest rates are raised. That said, the market is expecting a rate hike before the end of the year. Despite the relatively high value of the NZD, in view of investors’ continued demand for yield we expect the NZD to hold its ground vs. the USD this year. We would look to buy NZD/USD on dips and expect a re-test of the year’s high in the USD/NZD0.8535 on a 3 to 6 mth region."