RBNZ cuts rates, statement slightly hawkish – Westpac

By FXStreet FXStreet (Córdoba) – The RBNZ cut the OCR by 25bp to 2.50%, but the statement gave mixed messages about any further easing, the press release said more easing is possible, the detail said they are firmly on hold, according to Imre Speizer, analyst at Westpac.

Key Quotes

“We interpret this as slightly hawkish for the market, and the market has reacted so. NZD/USD up around 1/2c”.

The policy guidance paragraph in the press release read: “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, although the Bank will reduce rates if circumstances warrant. We will continue to watch closely the emerging flow of economic data.”

“However, the 90 day track was unchanged, and the detail in Statement confirmed the RBNZ expects to remain at 2.5%….The warning about the overvalued NZD exchange rate was re-introduced (after an omission in October)”.

“Market reactions to the MPS were unsurprising given the signal no further easing is expected.
NZD/USD rose from 0.6640 to 0.6733. We expect it to remain firm during the day ahead. AUD/NZD fell from 1.0860 to 1.0724, and is at risk of remaining …read more

Source:: FX Street