RBNZ Rate Announcement - NZD Lower

RBNZ Rate Announcement - NZD Lower

The RBNZ have kept the Official Cash Rate (OCR) at 3.50%, as expected.

The key points in the RBNZ statement are:

• Reserve Bank of NZ says would be appropriate to lower rates if demand weakens & inflation settles below target
• If wage and price setting outcomes settle lower, could cut rates
• Auckland house price inflation elevated
• NZD unjustifiably high and unsustainable
• Closely watching impact on tradeables inflation from global forces
• Lower dairy incomes, drought, fiscal consolidation, high NZD dollar weigh on growth
• Underlying inflation is expected to pick up gradually
• Underlying inflation low, expected to pick up gradually
• Not currently considering raising rates
• Policy to focus on mid-term inflation trend

In short, the RBNZ now has an easing bias and will cut rates if the economy and inflation slows, despite Auckland house price inflation.

The NZD fell sharply across the board in immediate response.

The next OCR decision will be held on 11th June.

Below is link to the full RBNZ statement:

http://www.rbnz.govt.nz/news/2015/near-zero-inflation-in-new-zealand.html

Current indicative levels are:

NZD-USD 0.7610 / 0.7635
NZD-AUD 0.9510 / 0.9535
NZD-EUR 0.6840 / 0.6865
NZD-GBP 0.4925 / 0.4950
NZD-JPY 90.60 / 90.90

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