RBNZ cut rates but exchange rate more concerning? - UOB

Analysts at UOB Group explained that RBNZ cut the OCR by 25bps to a record low of 1.75%, as widely expected.

Key Quotes:

"The central bank maintained that monetary policy will continue to be accommodative and plan to keep interest rates low “for a very long period of time”.

The exchange rate remains higher than is sustainable for balanced economic growth and, together with low global inflation, continues to generate negative inflation in the tradables sector. A decline in the exchange rate is needed. RBNZ’s Governor Wheeler said that the OCR decision is considered in light of the U.S election results and confirmed it was right decision. He don’t see any need at this stage for further fiscal stimulus."