- The RBNZ reviewed policy today, with a brief statement (there was no quarterly statement scheduled, no OCR forward guidance nor press conference, these are scheduled for 8 May).
- A steady hand at 1.75% was held as expected.
While the December qtr GDP report revealed that domestic demand was strong, with inflation expectations holding just above 2% with maximum sustainable employment achieved, Governor Orr was expected to repeat the key lines from the Feb MPS: “We expect to keep the OCR at this level through 2019 and 2020. The direction of our next OCR move could be up or down,” with a limited change in the statement from 13 February - Any surprises outside of that expected outcome would have likely impacted the value of the Kiwi - NZD/USD was at 0.6908 into the announcement - But...it is now trading at 0.6823.
RBNZ outcome:
- Keep expansionary for a considerable period.
- Next rate move is likely down - that is a change and weighing on the bird.
- The balance of risk has shifted to the downside.
RBNZ...(Says):
Says more likely direction of our next OCR move is down;
Says employment is near its max sustainable level;
Says global economic outlook has continued to weaken;
Says expect low interest rates, increased govt spending and investment to support growth over 2019;
Says weaker global economic outlook and reduced momentum in spending behind shift in rates outlook;
Says expected easier policy in other countries placing upward pressure on NZD.
Key notes:
About the RBNZ Rate Statement and Rate Decision:
RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD. The RBNZ Rate Statement contains the explanations of the decision on interest rates and commentary about the economic conditions that influenced it.
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