The Reserve Bank of New Zealand announcement will come this week, due at 2000GMT on 22 March
Last week we got the Q4 GDP data (data here,
0.4% q/q - A MISS
- expected +0.7% q/q, prior +0.8%, revised from +1.1%
2.7% y/y - A MISS
- expected 3.2% y/y, prior 3.3%, revised from 3.5% )
The drag on growth came from primary production issues:
- Milk & meat production held back by poor weather
- Forestry production gave back some previous strong gains
- Oil output was down (temporary closing of a major field)
A bounce back in all is expected for this current quarter
- Improvement in dairy prices (but most recently a fall again, so the bounce will be limited)
- Housing will remain strong, though tempered by high prices, higher interest rates, loan-to-value tightening - but should be a net positive for contributing to household consumption)
Despite the miss on the GDP results growth is still moderate, and fears of overheating seem off the mark.
The announcement this week from the RBNZ is an OCR (official cash rate) review, no Monetary Policy Statement (MPS) (the next one of those is scheduled for May), but there will be a statement from Governor Wheeler.
- No change to the OCR is the current consensus expectation
- No change to their outlook on rates is expected, to be maintained at neutral
- The RBNZ's expectation is for inflation still below target
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Ahead of the RBNZ this week is the GlobalDairyTrade auction (Tuesday London time)
- Current pricing is indicating another fall for the index
- Dairy prices under downward pressure from more supply coming on to the market, in New Zealand and in Europe
- Fundamentals in dairy markets are better than a year ago though - supply is off from last year's levels.
