HiFX Data Update - RBNZ Cuts OCR by 0.25% to 3.00%

HiFX Data Update - RBNZ Cuts OCR by 0.25% to 3.00%

The RBNZ have cut the Official Cash Rate (OCR) by 0.25% to 3.00%. The market has fully priced in a 0.25% rate cut.

The key points in the RBNZ statement are:
Growth outlook now softer than June policy statement
NZ economy growing at annual rate of around 2.5%
NZD$ has declined significantly, further depreciation needed & seems likely given weak commodity prices

Annual CPI expected to be close to target midpoint (2.0%) in early 2016
Uncertain on how quickly lower NZD$ will pass through into inflation
Canterbury rebuild appears to have peaked, dairy export prices have fallen sharply

Uncertainty remains around impact of expected us monetary tightening
Developments in China, Europe have raised market volatility
The NZD bounced sharply in volatile trading in immediate response.

The market was short going into this rate decision and a 0.25% cut was fully priced in. The accompanying statement was not as dovish as some were expecting, which caused the NZD to spike higher.

The next OCR decision will be held on 10th September.

Below is link to the full RBNZ statement:

http://www.rbnz.govt.nz/news/2015/ocr-23-july-2015.html

Current indicative levels are:

NZD-USD 0.6610 / 0.6635
NZD-AUD 0.8965 / 0.8990
NZD-EUR 0.6045 / 0.6070
NZD-GBP 0.4225 / 0.4250
NZD-JPY 81.95 / 82.20

ENDS

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