30 Apr 2015
RBNZ no longer considering rate hikes - Nomura
FXStreet (Bali) - Charles St-Arnaud, Economist at Nomura, notes that the RBNZ is no longer considering rate hikes following today's more dovish policy decision.
Key Quotes
"Overall, the RBNZ is turning slightly dovish, removing any reference to potential rate hikes. Moreover, the central bank makes it clear that rate cuts could be needed if growth slows or if inflation underperforms."
"However, 'the timing of future adjustments in the OCR will depend on how inflationary pressures evolve in both the non-traded and traded sectors'. This means that a rate cut is unlikely until the next CPI release in mid-July."
"Moreover, given the strength of the NZD, we would not be surprised if the RBNZ is using its policy stance to push the currency lower. We remain of the view that most of the weakness in inflation will be temporary, driven by lower fuel prices and, hence, believe that RBNZ will remain on hold this year, but acknowledge that the probability of a cut has increased."
Key Quotes
"Overall, the RBNZ is turning slightly dovish, removing any reference to potential rate hikes. Moreover, the central bank makes it clear that rate cuts could be needed if growth slows or if inflation underperforms."
"However, 'the timing of future adjustments in the OCR will depend on how inflationary pressures evolve in both the non-traded and traded sectors'. This means that a rate cut is unlikely until the next CPI release in mid-July."
"Moreover, given the strength of the NZD, we would not be surprised if the RBNZ is using its policy stance to push the currency lower. We remain of the view that most of the weakness in inflation will be temporary, driven by lower fuel prices and, hence, believe that RBNZ will remain on hold this year, but acknowledge that the probability of a cut has increased."