RBNZ holds rates at 3.50%, as expected

RBNZ interest rate decision March 12

• 2 of 16 economists surveyed by Bloomberg expected a rate cut
• The implied probability of a cut in the bill futures market was about 15%
• Previously the RBNZ said: "Future interest rate adjustments, either up or down, will depend on the emerging flow of economic data". They have repeated that statement.
• Foresees period of stability for rates
• Expect inflation to gradually return toward mid-point of range
• The previous decision was Jan 29
• NZDUSD traded at session lows at 0.7193 ahead of the data

Nothing dovish here so far, NZD jumps 30 pips.

• Significant fall in inflation expectations would warrant more supportive policy
• Full text of Wheeler's statement

That comment has helped to push NZD back down to pre-RBNZ levels.

Forecasts:

• Sees annual CPI at 0.4% at the end of 2015 (prior 1.5%)
• Sees annual CPI at 2.0% vs 2.0% prior
• Sees GDP to March 2015 at 3.2% vs 3.5 prior
• Sees GDP in March 2016 year at 3.5% vs 3.1% prior