RBNZ interest rate decision break down – ANZ

By FXStreet FXStreet (Guatemala) – Analysts at ANZ said that the RBNZ’s decision to cut the OCR today was of course against our own view.

Key Quotes:

“But when all is said and done, we can’t really quibble with it. In many ways the cut was of last week’s ECB-style easing; a cut was delivered, but it was of the hawkish variety.

What is quite clear from the tone of the statement and spirit of the projections is that there is now far more balance in the RBNZ’s thinking than in prior statements. The 90-day bank bill profile is flat from here, and the scenarios presented were both of the upside and downside variety.

The RBNZ’s economic assessment was similar to ours. The economy is picking up and inflation the same over time as capacity is absorbed. Such a central track does not require rates below pre GFC levels. We concur with that.

To be fair, a soft easing bias was retained, with the Bank stating that it “will reduce rates if circumstances warrant” and that this will be dependent on the flow of economic data. But it now appears clear that the hurdle for additional easing is reasonable high.

Despite the impact of the stronger NZD, …read more

Source:: FX Street