RBNZ on hold, a positive signal for bond markets?

The RBNZ’s decision to keep its policy rate on hold today illustrates how the bar for further rate hikes has become increasingly high for most central banks, even in the face of upside surprises to inflation. With money markets in New Zealand, and most other G10 economies, back to discounting relatively limited rate cuts over the next couple of years, we think that long-term government bond yields will resume their falls later this year as policymakers in most economies shift towards a broad-based monetary easing cycle.