RBNZ: Hibernation, Petrified and more Dovish than expected - BNZ

Analysts at BNZ state how the RBNZ has changed to a 'Petrified' state and today's Monetary Policy Statement confirmed their perspective, especially as the cash rate is expected to stay low for a very long time,

Key Quotes

"There was a slight nod to a tightening bias but the aforesaid tightening is not penned in until the December quarter of 2019. Moreover, Wheeler said categorically that the risks of lowering and increasing interest rates are (at least for the near term) evenly balanced."

"As expected, the RBNZ has chosen to focus more on the disinflationary forces impacting the economy than those pushing prices upward. In particular, it appears that the stronger currency has flowed through into its year-ahead CPI inflation track pushing the Bank’s annual inflation forecast down to 1.3% from a previously forecast 1.7%. And headline inflation now takes six months longer to get back to the 2.0% mid-point of the target band."

"The RBNZ’s downside biases are reflected in its key policy judgment that the “Risks to the global outlook remain skewed to the downside.” We, financial markets and a suite of leading indicators would appear to beg to differ. There are downside risks, but there are an equal number of upside ones too."

"The Bank talks of global economic conditions dampening inflationary pressures. In contrast, we see the inflationary risks increasingly pushing higher as evidenced by a rising global CPI, an upward push in the Chinese PPI, generally higher commodity prices and rising breakeven rates priced into global interest rates."

RBNZ presser: NZD/USD below 200-SMA on the 1hr sticks, no sign of FX intervention from Wheeler