Comments from RBNZ assistant Gov McDermott:
- Monetary policy to remain stimulatory
- RBNZ remains vigilant in watching price setting
- Monetary policy will help boost GDP, inflation
- Near-zero inflation mostly due to tradables
- RBNZ not considering any increase in interest rates at present
- Evidence of weaker demand would prompt consideration of lower interest rates
- Rising currency as prices fall 'is unwelcome'
- Timing of future adjustments in rates will depend on evolution of inflationary pressures
The kiwi was softening ahead of the comments but continued to fall as the comments got increasingly dovish. One thing to keep in mind is that the RBNZ is a dictatorship. Wheeler sets rates alone, although he takes advice under consideration.
NZD/USD down to 0.7600. Minor support at 0.7589 but there's better support around 0.7550.
NZDUSD intraday
Exactly what he said:
"Before considering any tightening in monetary policy we would need to be confident that increased capacity utilisation and labour market tightness was generating, or about to generate, a substantial increase in inflation"
"Evidence of weakening demand and domestic inflationary pressures would prompt us to consider lowering interest rates''
