29 Oct 2015
RBNZ: further cuts likely, NZD not overvalued - Nomura
FXStreet (Guatemala) - Charles Starnaud, analyst at Nomura noted the RBNZ kept its policy rate unchanged at 2.75%, as expected.
Key Quotes:
"The RBNZ stated that “some further reduction in the OCR seems likely. This will continue to depend on the emerging flow of economic data. It is appropriate at present to watch and wait”.
Overall, the RBNZ continues to signal that further rate cuts are likely, but that it will depend on incoming data. Moreover, the mention that the stronger NZD will dampen inflation and necessitate further rates cuts is sustained. Interestingly, the RBNZ removed the mention that further NZD depreciation is needed. This suggests that the concern regarding the currency is mainly attributable to its dampening effect on inflation rather than the NZD being viewed as overvalued.
We continue to believe that the RBNZ will cut its policy rates at the December meeting. The next important data release is the employment report next week."
Key Quotes:
"The RBNZ stated that “some further reduction in the OCR seems likely. This will continue to depend on the emerging flow of economic data. It is appropriate at present to watch and wait”.
Overall, the RBNZ continues to signal that further rate cuts are likely, but that it will depend on incoming data. Moreover, the mention that the stronger NZD will dampen inflation and necessitate further rates cuts is sustained. Interestingly, the RBNZ removed the mention that further NZD depreciation is needed. This suggests that the concern regarding the currency is mainly attributable to its dampening effect on inflation rather than the NZD being viewed as overvalued.
We continue to believe that the RBNZ will cut its policy rates at the December meeting. The next important data release is the employment report next week."