After leaving OCR unchanged, RBNZ Governor says hike chance in Dec "high"

By Sophia Rodrigues

Remind me how many central banks have stated the odds of the next move in any direction is "high." (Exception: emergency periods)

In my view, and given how the world works, if there is a conditionality attached, the condition becomes secondary when the probability is so explicitly stated. The probability is only negated by a large, unexpected event.

RBNZ Governor Anna Breman, in an interview, said the timing of further OCR increases is uncertain and will depend on the economic outlook and how inflation is evolving and the outlook for inflation, but it is still likely we will see further OCR increases.

The next question was a specific "what do you say are the chances for December?"

Reply: I'd say that they are "HIGH."

In another interview, Breman admitted "the RBNZ didn't have an opportunity to explain how we analyse and look at those inflation numbers (reference to 3Q CPI) because of the blackout period." (paraphrased)

I get that.

But the reality is everyone expected the RBNZ to hike, and it's hard to argue there wasn't a strong case based on the data and everything else.

Breman repeatedly said -- unusually repeatedly -- the OCR will go up further, and likely to touch a higher peak.

The question is what is a least regret approach in such a situation, especially when you make comments like this post-decision (which shows regret):

"I really wish I would have had time to explain....."
"I don't like it..." (a personal view on the exchange rate fall)
"It is bad. We don't want to see a weakness in the NZ dollar in this environment" (reply to question whether CNBC headline NZ dollar tanks is bad?"

And then to make this comment:

"We don't want a situation where markets can game the Reserve Bank and they just push the market pricing up. And then we have to increase the rate. That's not a situation I would ever accept..We are the ones who make these decisions, not market."

There might have been instances when markets have gamed a central bank (I don't know that) but this was certainly not one of them.

And yet the markets were unfairly punished.

Draw your own conclusion.