RBNZ seen ‘on hold’ for the time being – UOB
|The RBNZ is expected to keep the accommodative monetary stance unchanged for a considerable period of time, noted researchers at UOB Group.
Key Quotes
“Earlier today, the RBNZ left the Official Cash Rate (OCR) unchanged at 1.75% as widely expected and maintained that monetary policy will remain accommodative for a considerable period of time. Although the Bank acknowledges that the impact of new government policies remains “very uncertain”, it states that the government’s proposal to add employment to RBNZ’s mandate is unlikely to have a major impact on monetary policy”.
“Despite seemingly restrictive policies from the new government, the RBNZ kept to its growth forecasts, averaging 3.3% over the next 2 years. Due to a weaker NZD stoking consumer prices, it now expects inflation to hit the midpoint of its 1% to 3% target sooner, in 2Q 2018 and subsequently hold there with no changes to the longer term forecasts. Its projection for a rate hike is also brought forward by one quarter to 2Q 2019”.
“On the currency, with a 4.5% drop in the NZD TWI since the August meeting, Acting Governor Grant Spencer said the currency is in the vicinity of fair value. The TWI (current: 73.93) is now assumed to be 73.5 all the way to 4Q 2020”.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.