Bank bill futures in New Zealand have dropped precipitously in the last month, taking them well below the 25 basis point official cash rate set by the RBNZ at their 16 March meeting, when they cut rates by 75bp. Back then, the end of year implied rate from bank bill futures was 0.77%, so not much term premium over the official cash rate, but basically in line with it, plus a small spread of a few basis points. Today, the end of year implied rate is 19bp, fully 6bp below the official cash rate. Should we be pricing in a cut in rates to zero or even negative rates? {image}Maybe, but probably not The arguments in favour ... (full story)