RBNZ’s Orr: We have made clear that the next move is most likely up, so we can afford to wait

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr crossed wires during early Thursday morning in Asia, justifying Wednesday’s monetary policy decision to the Members of the Parliaments (MPs).

The RBNZ Boss cited Delta covid variant as the key hurdle for the rate hike while reiterating the view to reduce stimulus over time.

Key quotes

House prices are above their sustainable level.

The key drivers of housing supply and demand have turned around.

Expect house price inflation to moderate significantly in the period ahead.

House prices are assumed to eventually fall as momentum in the housing market fades.

Our ‘least regrets’ policy was to reduce interest rates to very low levels to support the economy.

View is to reduce stimulus over time.

View to increasing cash rate towards a more neutral level over next 18 months.

Underlying demand for housing is at a very low rate.

Highly likely that RBNZ would have hiked rates without the delta lockdown.

We have made clear that the next move is most likely up, so we can afford to wait.

Currently looking at again consulting on further LVR restrictions.

FX implications

NZD/USD pays a little heed to the comments as nothing new could be heard. That said, the pair bears take a breather below 0.6900, near 0.6885, the lowest since November 2020 by the press.

Read: NZD/USD starts in early Asia better offered