NZD: RBNZ expected to stand firm – Nomura

By FXStreet FXStreet (Delhi) – Research Team at Nomura, suggests that the Reserve Bank of New Zealand (RBNZ) holds its next policy meeting on 28 January.

Key Quotes

“At the 10 December meeting, the RBNZ lowered its policy rate to 2.50%. In the statement following the decision, the RBNZ stated that “monetary policy needs to be accommodative to help ensure that future average inflation settles near the middle of the target range. We expect to achieve this at current interest rate settings”, signalling that it believes further cuts are unlikely to be needed. However, the central bank added that “the Bank will reduce rates if circumstances warrant”, suggesting that there is still a fairly high probability that it may need to cut rates further.

Since the December meeting, the data picture has been mixed, with an improvement in growth indicators, but continued weak inflation. Nevertheless, the focus of the RBNZ remains on inflation. But while the headline inflation number was weaker than expected, most of the surprise is linked to weaker petrol and food prices, while domestic inflationary pressures remained stable, albeit low. Moreover, the depreciation in the NZD TWI since the December meeting is also likely reducing some of the RBNZ’s concerns. …read more

Source:: FX Street