From the RBNZ statement on their rate hike this morning (bolding is mine):
- said the economy “appears to be adjusting to the monetary policy tightening that has taken place since the start of the year”
- “It is prudent that there now be a period of assessment before interest rates adjust further towards a more-neutral level”
- “The speed and extent to which the OCR will need to rise will depend on the assessment of the impact of the tightening of monetary policy to date, and the implications of future economic and financial data for inflationary pressure”
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The statement is clear … it is now time for ‘assessment’.
There is an election due in New Zealand on September 20, so there will be no more action from the RBNZ before then. Yes, the RBNZ is independent (and independent of the political cycle) but they don’t wander the corridors of power looking for fights.
Prior to this announcement today market consensus was for a pause in the tightening cycle through to December (or a paws, if you’re a bear, I suppose). It now appears much more data dependent and I would think, right now, that given the weakening data re NZ lately the pause will stretch further.
But, make no mistake, the RBNZ are still looking for reasons and timing to hike … before interest rates adjust further towards a more-neutral level“.
