Ructions in financial markets are normally a sign of trouble and so tend to have dovish implications for interest rates. However, this latest “turmoil” tends to reinforce the case/risk for higher rates. And especially so for the NZ OCR, in that one of the main fall-outs has been a trade-weighted exchange rate (TWI) looking more and more likely to undershoot RBNZ expectations, amid no real change in the local economy’s outlook.
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BNZ