The Reserve Bank of New Zealand (RBNZ) unexpectedly trimmed its official cash rate (OCR) by 25 basis points to 5.25% during its August 2024 policy meeting, marking the first cut since March 2020. This comes off the back of the annual inflation rate in New Zealand slowing to 3.3 in the second quarter of 2024 marking the lowest inflation reading since Q2 of 2021.

Last Wednesday, the Australian Bureau of Statistics (ABS) reported that the Consumer Price Index rose by 3.5% for the 12 months ending in July 2024, down from 3.8% for the previous 12 months. This increase, slightly above the 3.4% forecasted by economists, points to the likelihood of interest rate cuts.

As the data in the chart below shows, swaps traders are pricing in similar interest rates for New Zealand (NZDOIS1Y=OMFS) and Australia (AUD1YOIS=TRDA) in 12 months’ time. However, with the current rate in New Zealand 90 bps higher, the market is expecting to see faster cuts in New Zealand than in Australia.

At TraditionData, we provide a full suite of AUD and NZD OIS data, allowing you to stay on top of important market movements in these territories.

Overnight Indexed Swaps (OIS)


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