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12 Mar 2015
RBNZ to maintain neutral policy stance for longer – BTMU
FXStreet (Barcelona) - With RBNZ keeping rates on hold, Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, notes that central bank’s statement regard interest rate stability implies that New Zealand might not see a neutral policy until at least early 2017.
Key Quotes
“The New Zealand dollar has outperformed in the Asian trading session following the latest RBNZ monetary policy meeting. The RBNZ left its’ key policy rate unchanged at 3.50% and stated that it sees a “period of interest rate stability”.”
“The RBNZ’s updated projections for the 90-day bank bill rate signal that they now expect to keep its policy rate unchanged until at least early in 2017.”
“Governor Wheeler highlighted that New Zealand’s economy is in a different situation to those which have already warranted a loosening in monetary policy. The RBNZ expects economic growth to remain solid expanding by 3.2% in year to March 2015 and 3.6% in the year to March 2016.”
“The main revisions were to the outlook for inflation which were revised markedly lower in the coming years. The forecasts for the annual rate of headline inflation were lowered to 0.0% in the year to March 2015 and to 1.3% in the year to March 2016.”
“Governor Wheeler emphasized that the key issue is the impact of lower price expectations and if price expectations were to fall “a lot” it could trigger further easing which is a relatively high hurdle.”
“The New Zealand dollar is likely to continue to derive some support from the relatively hawkish stance of the RBNZ as other central banks continue to ease policy. The RBNZ reiterated its concern that the strength of the New Zealand dollar continues to remain “unjustified” and “unsustainable”.”
“The recent deterioration in New Zealand’s terms of trade will have reinforced that view and argue further in favour of an eventual adjustment lower for the New Zealand dollar.”
Key Quotes
“The New Zealand dollar has outperformed in the Asian trading session following the latest RBNZ monetary policy meeting. The RBNZ left its’ key policy rate unchanged at 3.50% and stated that it sees a “period of interest rate stability”.”
“The RBNZ’s updated projections for the 90-day bank bill rate signal that they now expect to keep its policy rate unchanged until at least early in 2017.”
“Governor Wheeler highlighted that New Zealand’s economy is in a different situation to those which have already warranted a loosening in monetary policy. The RBNZ expects economic growth to remain solid expanding by 3.2% in year to March 2015 and 3.6% in the year to March 2016.”
“The main revisions were to the outlook for inflation which were revised markedly lower in the coming years. The forecasts for the annual rate of headline inflation were lowered to 0.0% in the year to March 2015 and to 1.3% in the year to March 2016.”
“Governor Wheeler emphasized that the key issue is the impact of lower price expectations and if price expectations were to fall “a lot” it could trigger further easing which is a relatively high hurdle.”
“The New Zealand dollar is likely to continue to derive some support from the relatively hawkish stance of the RBNZ as other central banks continue to ease policy. The RBNZ reiterated its concern that the strength of the New Zealand dollar continues to remain “unjustified” and “unsustainable”.”
“The recent deterioration in New Zealand’s terms of trade will have reinforced that view and argue further in favour of an eventual adjustment lower for the New Zealand dollar.”