The Reserve Bank of New Zealand announced no change to the official cash rate, but released the dove!
Westpac are quick with their analysis. in brief:
- Delivered no major surprises
- Did affirm the conditional easing bias laid out in last week's speech in perhaps more emphatic fashion than expected
(referring to McDermott: RBNZ not considering any increase in interest rates at present)
More:
- Repeated last week's signal (via the Assistant Governor's speech) that it may cut the OCR if certain conditions are met (declines in inflation expectations or domestic demand)
- The crucial policy paragraph/s repeated the main elements from last week's speech: "The timing of future adjustments in the OCR will depend on how inflationary pressures evolve in both the non-traded and traded sectors. It would be appropriate to lower the OCR if demand weakens, and wage and price-setting outcomes settle at levels lower than is consistent with the inflation target...The Bank will continue to monitor and carefully assess the emerging flow of economic data.."
- The previous warning about the high NZD exchange rate was repeated
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For me, couple of things to keep in mind for the RBNZ:
- Yes, they have shifted to an easing bias ... but rates are going to be on hold for a good while to come
- They are back to jawboning th NZD lower
