RBNZ Cash Rate unchanged at 2.50% - NZD lower

RBNZ Cash Rate unchanged at 2.50% - NZD lower

The RBNZ’s Official Cash Rate (OCR) is unchanged at 2.50%. This was widely expected.

The key points in the RBNZ statement are:

• Reserve Bank of NZ Cash Rate target is unchanged at 2.50%
•
• There has been some easing of financial conditions in recent weeks
•
• Further rate cuts may be needed over coming year
•
• Inflation taking longer than expected to reach target rate
•
• Watching data closely
•
• Many risks around outlook (China, Fonterra Payout, Inflation)
•
• Risks include housing market pressures
•
• Further fall in NZD$ appropriate
•
• Auckland house price inflation remains a stability risk
•
• Some signs rate of increase in house prices may be moderating
•
• House price pressures also building in some regions outside Auckland
•
• Monetary policy will continue to be accommodative
•
The NZD is lower in immediate response. The NZDUSD has now fallen over 100 points from before the 8am US Fed Reserve interest rate decision (no change).

Prior to the RBNZ announcement, the Fonterra cut the 2015/16 farmgate milk forecast to NZD$4.15 kgms (from $4.60). They mentioned challenging economic conditions, the imbalance between supply & demand, and prices are unsustainably low globally.

The RBNZ is likely to lower interest rates in the coming months, and are happy with a lower NZD.

The next OCR decision will be held on 10th March 2016.

Below is link to the full RBNZ statement:
http://www.rbnz.govt.nz/news/2016/ocr-28-jan-2016.html

Current indicative levels are:
NZD-USD 0.6420 / 0.6445
NZD-AUD 0.9160 / 0.9185
NZD-EUR 0.5885 / 0.5910
NZD-GBP 0.4505 / 0.4530
NZD-JPY 76.20 / 76.45

ends

© Scoop Media