HiFX Data Update - RBNZ Cuts OCR by 0.25%

HiFX Data Update - RBNZ Cuts OCR by 0.25% to 2.25%, NZD Lower

The RBNZ cut the Official Cash Rate (OCR) by 0.25% to 2.25%. This was somewhat of a surprise,although the markets had expected this to occur in the upcoming months.

The key points in the RBNZ statement are:

Reserve Bank of NZ Cash Rate target is cut by 0.25% to 2.25%

• Further policy easing may be required
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• Headline inflation expected to move higher in 2016
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• Rates policy will continue to be accommodative
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• Watching emerging data flow
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• House prices in Auckland have moderated
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• Many risks to the outlook
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• Sees downside risks to global growth
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• Risks to China growth
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• Sees risks to dairy sector; decline in inflation
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• See price even payout for dairy farmers is NZD$5.30 per kgms
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• Material decline in inflation expectation measures
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• Sees slower growth in China, emerging markets, Europe
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• Commodity prices remain low
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• Domestic growth supported by migration, tourism, construction
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The NZD is sharply lower in immediate response – the NZDUSD plunged over 100 points straight away. The NZDAUD is well under 0.9000.

Governor Wheeler is giving a press conference now and testifies on Monetary Policy before the Finance and Expenditure Select Committee at 12:10pm.

The next OCR decision will be held on 28th April 2016.

Below is link to the full RBNZ statement:
http://www.rbnz.govt.nz/news/2016/03/official-cash-rate-reduced-to-2-25-percent

Current indicative levels are:
NZD-USD 0.6665 / 0.6690
NZD-AUD 0.8900 / 0.8925
NZD-EUR 0.6060 / 0.6085
NZD-GBP 0.4685 / 0.4710
NZD-JPY 75.55 / 75.80

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