RBNZ will almost certainly keep rates on hold again.

We think the Bank will try to discourage further rate cut expectations by signalling rates will be held at 5.50% or cut only by 25 bps in the whole of 2024. That can help NZD get some further support, although the very good performance of the Kiwi of late remains almost solely a function of external factors. 

Domestically, it’s worth keeping an eye on the expected change in the RBNZ remit by the newly installed government, which plans to remove the dual mandate to focus on inflation only. In our view, that is a long-term NZD-positive.