Analysts at Td Securities noted that the RBNZ left the cash rate at 1.75% as widely anticipated, but despite a string of strong activity reports, the OCR forward guidance was unchanged, a clear dovish message.

Key Quotes:

"Despite on-trend 3% GDP growth and full employment, the RBNZ continues to fret that growth isn't strong enough to generate inflation."

"Subsequently "We expect to keep the OCR at this level through 2019 and into 2020" and the growth disappointment rate cut scenario remains, where "the OCR would need to be reduced by about 75bp"."

"The RBNZ's inflation profile was lifted as widely expected, but "... [we] assume firms have limited pass through of higher costs into generalised consumer prices". Subsequently, as the Bank looks through energy-related cost increases, the OCR profile still claims that the first +25bp is not until Dec qtr 2020."

"The Governor is still in wait, watch and worry mode as "Downside risks to the growth outlook remain. Weak business sentiment could weigh on growth for longer. Trade tensions remain in some major economies, raising the risk that trade barriers increase and undermine global growth"."

"In the press conference, Governor Orr repeated his main message that a rate cut remains on the table. Perhaps the tightening cycle of 2014 left deeper scars than we thought.
Despite the clear message that OIS should not price in rate hikes before 2020, we remain of the view that the record low cash rate has a much shorter shelf life, and look for +25bp in Dec qtr 2019. Perhaps the new internal/external MPC regime next year sees sense."

"NZD so far little changed near $US0.68. While the tone of the RBNZ remains the same, we do not think this will spoil the kiwi rally (the data is hard to ignore). We think a buy on dips stance is appropriate for NZDUSD, and see NZD outperformance extending on both AUD and CAD crosses."

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