JP Morgan research note on New Zealand interest rates and the Reserve Bank of New Zealand
- Real cash rate in New Zealand has risen substantially but expect it "to stabilize, driven by a gradual recovery in inflation, not by RBNZ cuts"
- "The question here is whether the RBNZ has made a mistake, such that the current policy settings are too tight. We argue to the contrary, as the high level of real rates seems reasonable given investment trends. And, based on our growth forecasts, and our assumptions about how investment and productivity will evolve, we expect the real cash rate to remain high, but to moderate somewhat over 2015-16"
- "We expect this to occur through a gradual rise in inflation, which more than offsets an expected 50bp of hikes in 2016"
via MNI
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NZD up a little on the session:
