RBNZ gov Orr says will not be changing policy for a prolonged period of time

The Reserve Bank of New Zealand governor Adrian Orr says will not be changing policy for a prolonged period of time and that committee remit policy targets are unchanged. 

He said the NZD is near fair value.

Orr said the prior day that inflation will need to sustainably be at its target midpoint range before any tightening of monetary conditions are considered.

He also said the bank wants to make sure that the economy does not get into a deflation spiral.

The RBNZ left interest rates unchanged on Wednesday, adding that continued monetary stimulus was necessary.

Key quotes

Orr says will not be changing policy for a prolonged period of time.

Orr says govt direction makes specific how financial stability policies and actions can assist in housing policy objectives.

Orr says will considering our financial stability policy settings via our prudential tools – like loan-to-value ratios, bank stress testing.

Orr says remain only focused on inflation and maximum sustainable employment.

Orr says remain committed to current stimulatory monetary settings.

Orr says may have to stimulate the economy even further; want to keep options open.

Orr says can stimulate even further with a negative OCR; that's an option.

Orr says convinced that best thing to do now is be patient.

Orr says monetary settings will be stimulatory for a long period of time.

Market implications

The New Zealand dollar was boosted this week following the RBNZ announcements in pent=up demand for higher yielders in a risk-on environment.

The prospects of the central bank taking house [rice inflation into consideration was an additional factor that helped see the kiwi off to fresh cycle highs. 

However, if the market gets a sense that there is no hurry to change policy anytime sooner than stipulated, then the bird could fall out from the sky.