A round-up of comments from Reserve Bank of New Zealand’s governor Wheeler’s news conference (via Bloomberg):
- Says oil price decline is favorable
- Says economy to grow faster than capacity in the next 2 yrs
- Monetary policy has not been held too tight
- Monetary policy is still expansionary
- Neutral rate may be below 4.5%
- Moving earlier reduces risk of higher rates
- He won’t comment on currency intervention
- He was surprised to see NZD jump today
- Not anticipating OCR cut at this point (OCR is “Official Cash Rate”)
- NZ economic story is very good
- Not an environment to be cutting interest rates in
- Dairy price decline should weigh on currency
- May be at start of significant upswing in US dollar
- Market expectations are cash rate on hold till 2h 2015
- Surprised by NZD jump given longer rate pause signal
The end (of the news conference)
–
Wheeler will be spewin’ (technical term … “spewing” – very upset) the NZD/USD has jumped. While NZD/USD has been declining the NZD against other currencies has not fallen nearly so much (yen excluded) due to the strength of the USD. The RBNZ needs NZD/USD (and the RBA need AUD/USD) to keep on falling so as to lower the currency against other currencies also.
And … probably of more significance for the AUD … the currency has fallen a good way (hitting Glenn Stevens’ mumbled 0.85 target) but given the massive fall in commodity prices its still too high for the comfort of the central bank.
Central banks don’t always get what they want, though … or at least not in the timeframe in which they want it.
