ANZ analysts see NZ in leading position to normalize monpol

By Sophia Rodrigues

Forex analysts at ANZ have created an interesting pressure gauge to measure and rank the distance that each G10 economy is from its central bank's broad policy targets. According to the gauge, New Zealand is at leading position, the US is at number two and Australia is at number five. This means RBNZ should be the first one to normalize policy but according to ANZ analysts the relative openness and size of each economy will also play a role in determining when each respective central bank decides to move.

"On this front, with the US in number two position on our gauge, it is likely that most central banks will wait for the cover of a more hawkish Fed to start recalibrating policy. Equally, with the US in second place, it is possible they could be some adjustment to unconventional policies in 2021, even if formal policy rates stay on the lower bound," they wrote in a note.

The researchers are Daniel Been (head of fx), John Bromhead (fx strategist) and Rahul Khare (fx analyst).