RBNZ monetary policy summary – Westpac

By FXStreet FXStreet (Bali) – Westpac provides a summary on the recent policy decision taken by the RBNZ to cut interest rates by 25bp to 2.75%, noting that NZD/USD is not expected to fall too much below 0.6300 during the day ahead.

Key Quotes

The RBNZ’s Monetary Policy Statement this morning cut the OCR by 25bp to 2.75% as was widely expected. It also signalled the OCR could eventually fall to 2.5%, which many had expected.

This guidance was made via the press release as well as the 90 day interest rate forecast. The crucial policy paragraph read: “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. At this stage, some further easing in the OCR seems likely. This will depend on the emerging flow of economic data.”

The 90-day interest rate forecast reinforced that. It was lowered by around 50bp from 3.1% to 2.6%, which is consistent with a 2.5% OCR.

The previous warning about the high NZD exchange rate was repeated, albeit toned down given the large fall since June: “While the lower exchange rate supports the export and import-competing sectors, further depreciation …read more

Source:: FX Street