RBNZ: 25 basis cut; more to follow – Nomura

By FXStreet FXStreet (Delhi) – Charles St-Arnaud, Research Analyst at Nomura, suggests that after the RBNZ cut its policy rate by 25bp to 2.75%, we can expect at least one more cut by the bank before the end of the current year because of the weak outlook of the New Zealand’s economy.

Key Quotes

“The RBNZ cut its policy rate by 25bp to 2.75%, as expected, with the RBNZ stating that ‘a reduction in the OCR is warranted by the softening in the economy and the need to keep future average CPI inflation near the 2 percent target midpoint’.”

“The policy statement is also roughly in line with our expectation, but judging by the market reaction, it seems that it was more dovish than the market anticipated. More specifically, the RBNZ kept its easing bias, saying that ‘some further easing in the OCR seems likely’.”

“The RBNZ signalled that further policy easing is likely and is the result of a downward revision to the growth forecast in the Statement on Monetary Policy.”

“On the currency, while the RBNZ continues to expect further depreciation, the change in the language suggests that the needed adjustment is smaller than in June, especially with NZD and the TWI having depreciated by …read more

Source:: FX Street