RBNZ: Monetary policy unchanged, global concerns weigh – ANZ

By FXStreet FXStreet (Delhi) – Research Team at ANZ, notes that the RBNZ left policy unchanged today, as expected. However, its concern over the global outlook and ability of inflation to return to its target range within a comfortable timeframe has increased.

Key Quotes

“Whereas its easing bias in December was conditional, a more explicit bias was evident today, with the Bank noting that “some further policy easing may be required over the coming year to ensure that future average inflation settles near the middle of the target range.”

Despite maintaining an expectation of an improved growth backdrop over the year ahead – and even explicitly acknowledging core inflation at 1.6% and stable inflation expectations – low headline inflation remains a headache for the Bank. While it almost goes without saying given oil price moves, the RBNZ noted that “Headline inflation is expected to increase over 2016, but take longer to reach the target range than previously expected.” That creates presentations issues.

It’s far from one way traffic though.
• Growth is still very solid.
• The RBNZ makes explicit reference to core inflation being 1.6%. No doubt this acknowledgement is partly to dilute sensitivities towards a low headline inflation rate but it’s still notable.
• Housing risks are …read more

Source:: FX Street