Economists at ING expect a hawkish 50 bps RBNZ hike, which could lift the New Zealand Dollar, but dovish risks have risen. 

Watch the cyclone risk

“We are aligned with the consensus call for a 50 bps rate hike.”

“There is one key risk to our call though: the impact of the cyclone in New Zealand. This has triggered growing speculation that the RBNZ will only hike by 25 bps or even pause, and is probably behind the drop in NZD/USD to 0.6200. Admittedly, this downside risk has become more material now, but we stick to our call for a hawkish 50 bps hike by the RBNZ, and we think this will lift the New Zealand Dollar tomorrow.” 

“However, we think this may be one of the last times the RBNZ has a direct positive impact on NZD as many factors suggest a dovish pivot will come soon.”

See – RBNZ Preview: Forecasts from six major banks, 50 bps seems appropriate