Comments from BNZ in the wake of the Reserve Bank of New Zealand decision and statement today.
BNZ say that 'the hurdle' to the RBNZ actually cutting rates is high (bolding is mine):
- The direction of intent is clear but the hurdle, in our view, remains high
- We do expect GDP growth to slow and for that growth to be lower than the RBNZ anticipates
- Will be accompanied by a weakening in the exchange rate that will offset the disinflationary impact of the slowdown leaving the RBNZ's projected inflation track largely unchanged
- We also believe inflation expectations will fall, as headline inflation remains very low for an extended period of time but we doubt that wage and price setting behaviours will decline so much that they become inconsistent with the inflation target
- Most importantly, even if behaviours shift, the RBNZ states that outcomes would have to "settle" at low levels. This implies that the RBNZ would need several observations through time before it responded to anysuch change in behaviour. Consequently, any rate cut will be later rather than sooner.
Here's all of the NZ coverage today in one spot:
JP Morgan says RBNZ to remain on hold through 2015
UBS changes its RBNZ forecasts - Says will keep OCR unchanged 'til mid-2016
New Zealand March Building Permits
New Zealand - ASB put the odds on an RBNZ rate cut this year at 50%
Analyst responses to the RBNZ unchanged decision
Forex technical analysis: NZDUSD moves lower on RBNZ statement
RBNZ: On hold at 3.5%
Forex technical analysis: NZDUSD ceiling above, 200 and 100 hour MA below
Fonterra cuts milk price payout forecast
- Preview of the RBNZ policy decision due Thursday morning (NZ time)
