Highlights of the RBNZ statement:
- Repeats that policy will remain accommodative for a considerable period
- Further depreciation of NZD needed to balance growth (had previously said "the exchange rate remains higher than is sustainable for balanced growth")
- Notes that the trade-weighted exchange rate has fallen 4 percent since February
- Sees inflation returning to 2% over medium term
- Weak Q4 GDP due in part to temporary factors
- Macroeconomic indicators in advanced economies have been positive over the past two months
The New Zealand dollar initially fell on the repeat of the 'considerable period' line but the market rebounded, in part because of the commentary on inflation.
"Headline inflation has returned to the target band as past declines in oil prices dropped out of the annual calculation. Headline CPI will be variable over the next 12 months due to one-off effects from recent food and import price movements, but is expected to return to the midpoint of the target band over the medium term," the statement says.
The return to target is a change from the prior statement, where it said it would happen "gradually."
