RBNZ's Gov Wheeler speech on Monetary Policy

HiFX Data Update - RBNZ's Gov Wheeler speech on Monetary Policy

RBNZ Governor Wheeler has given a speech this morning titled "Some thoughts on the balance of risks around the Reserve Bank’s monetary policy setting."

His key points were as follows:

• Risks around cash rate equally weighted
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• There is an equal probability that the next OCR adjustment could be up or down
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• Global risks for cash rate negative; local positive
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• Current forecasts imply flat rates for two years
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• Trump policies greatest risk to outlook
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• Rising protectionism would slow global growth
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• Biggest local risks linked to housing, NZD$
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• House price inflation has moderated, but too early to say whether this will continue
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• Whether monetary easing would be required to offset high NZD$ depends on the factors driving the exchange rate
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• Domestically, there are several uncertainties around the economy including commodity prices, exchange rate, migration
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• Higher US tariffs would raise prices for US consumers
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• Higher US tariffs would risk accelerated fed hikes
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• New Zealand would suffer amid rising protectionism
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• US fiscal expansion would buoy NZ economy
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• We consider the balance of risks for the global outlook to be downside
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The NZD was little changed in response to Gov Wheeler’s speech.

Current indicative levels are:

NZD-USD 0.7155/ 0.7180
NZD-AUD 0.9315 / 0.9340
NZD-EUR 0.6775 / 0.6800
NZD-GBP 0.5815 / 0.5840
NZD-JPY 81.25 / 81.50

Here is the link to the complete speech:

http://www.rbnz.govt.nz/news/2017/03/reserve-bank-sees-risks-equally-balanced

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