RBNZ's McDermott - Bank could change language if NZD appreciates in TWI terms
|RBNZ Assistant Governor McDermott has warned that central bank could use different language if the NZD exchange rate appreciates on a trade-weighted index (TWI) basis.
The RBNZ Governor Spencer took note of the rise in the nominal exchange rate earlier today, and said, "we assume the trade-weighted exchange rate will ease over the projection period.”
McDermott comments (via Reuters)
- Comfortable with TWI moves, not enough to move us from current strategy
- If TWI kept moving up and was following trend, think RBNZ would start using different language
- Weakness against USD not what we anticipated; question is will it last
- Little change in view on inflation for last few quarters
- Core inflation still needs a little shove to get it towards midpoint of target range
- Non-tradeable inflation, inflation expectations key influences on OCR track
- Range of risks to outlook mean equal probability next move could be cut
- GDP revisions suggest speed limit for economy moved up to near 3 pct before inflation generated
- Equity market volatility considered at meeting, not material at moment
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