RBNZ cuts rates by 25 basis points (1.75%) as expected

As widely expected, RBNZ has decided to cut rates by 25 basis points at 1.75%, highlighting that their monetary policy will continue to be accommodative.

Key headlines (via Reuters):

• Official cash rate at 1.8 pct in March 2017
• Official cash rate at 1.7 pct in June 2017
• Official cash rate at 1.7 pct in Dec 2017
• TWI NZD at around 75.1 pct in dec 2017 (pvs 74.4 pct)
• Annual CPI 1.7 pct by December 2017 (pvs +1.6 pct)
• Monetary policy will continue to be accommodative
• Decline in the exchange rate is needed
• NZD is higher than sustainable
• Numerous uncertainties remain particularly in respect of international outlook
• Domestic growth expected to remain supported by strong population
• Assumptions indicate that policy settings will see growth strong enough to have inflation in middle of target range
• Annual inflation expected to rise from dec quarter
• House price inflation remains excessive
• Dairy auction positive and certainty remains about future
• Dairy price auctions positive but uncertainty remains around future outcomes
• Annual CPI inflation was weak in Sept quarter
• Domestic growth supported by strong population growth, construction, tourism and accommodative monetary policy
• RBNZ says high migration supporting labour supply growth, limiting wage pressure