Highlights of the Nov 10, 2016 interest rate decision from the RBNZ
- Prior was 2.00%
- The OIS market was pricing in a 81.3% chance of a cut
- All 17 economists surveyed by Bloomberg were forecasting a cut
- Full text
The New Zealand dollar was more subdued on the US election than some other trades, in part due to uncertainty about the RBNZ. The daily range was 0.7265 to 0.7395 with the pair slightly off the lows shortly before the decision.
More RBNZ statement headlines:
- Sees average OCR at 1.8% in Q1
- Sees average OCT at 1.7% in Q2 and Q3
That's a hint at a chance of another cut but it might just be a rounding error.
- A decline in the exchange rate is needed
- Sees inflation hitting 2% in Q4 2018 vs Q3 2018
The minor pushback in inflation is a hint that the RBNZ doesn't see much more work to do.
- Sees growth strong enough for mid-range inflation
- NZD helping to generate negative inflation in tradeables
Key headlines from the statement:
- Monetary policy will continue to be accommodative
- Our current projections and assumptions indicate that policy settings, including today's easing, will see growth strong enough to have inflation settle near the middle of the target range
That final sign is the strongest sign that the RBNZ doesn't plan to cut again and that's why NZD has jumped 75 pips on the headlines.
