Next Wednesday, the Reserve Bank of New Zealand will meet for its last monetary policy meeting of the year and also for the last time under the leadership of Acting Governor Christian Hawkesby, Commerzbank's FX analyst Volkmar Baur notes.

RBNZ to hold back on further action in the coming week

"The market seems to be in broad agreement and is already fully pricing in a 25 basis point rate cut. Even the monthly price indicators published this morning, which show continued high price pressure, have done nothing to change this. However, they reinforce my assessment that a cut in the key interest rate next week is not yet a foregone conclusion."

"New Zealand only publishes a complete set of inflation figures once a quarter, and these are therefore crucial for the central bank. Only a handful of indicators are published each month, which together account for around 45% of the total basket of goods and services. Nevertheless, this usually provides a very good indication of the trend. With an annual rate of 2.9%, prices rose slightly more slowly in October than in September (3.2%)."

"However, the inflation rate is still very close to the upper end of the central bank's target range (2-3%). And, of course, it should also be borne in mind that the last interest rate move at the beginning of October, when the RBNZ cut its interest rates by 50 basis points, has probably not yet had its full effect. I therefore continue to assume that the central bank will hold back on further action in the coming week – but I do see the risk that the central bank will be somewhat bolder than I would be."