The Reserve Bank of New Zealand meet this week, with a new Governor and no government (well, there is a 'caretaker' arrangement).

  • Yes, that's right, Graeme Wheeler will not be governor, his term is up and there is an 'acting' governor - Grant Spencer

And, negotiations are underway to from a government after the weekend election resulted in a hung parliament. I posted on New Zealand election outcome uncertainty - the two key dates to watch yesterday:

  • There are still more than 380K 'special votes' to be counted - these could change current standings. The final election count/result will not be declared until 7 October
  • The wait for certainty could extend to October 12

For the RBNZ:

  • Monetary policy announcement due 27 September at 2000GMT (that is Thursday local NZ time)
  • The Official Cash Rate is 1.75% and there is no change expected (pretty much a unanimous no change expectation)

I posted a preview yesterday: NZD traders - heads up for the RBNZ this week (preview)

Here is another, this one via Kiwibank (in brief):

  • The RBNZ is expected to leave the OCR unchanged at 1.7S% at this week's September OCR Review
  • While there have been a few pieces of interesting data since the August MPS, we expect this week's review to pass without much impact
  • Political matters - both domestic and international -are more likely to take centre stage this week
  • We expect to see little change in the tone from the RBNZ, with the bulk of the policy statement unchanged
  • We maintain our view that the RBNZ will leave the OCR unchanged until the end of 2018, before gradually hiking interest rates.

More:

  • Since the RBNZ's last Monetary Policy Statement (nips) in August, net-net there has been little data of note to warrant a shift in our view and we suspect the RBNZ will be of a similar mind-set.
  • In addition, political uncertainty remains and it will take time before a new government is formed and Its fiscal policies and the flow-on effects to the economy become dear.
  • Given this environment, we expect the Bank wil remain happy to sit on its hands and fully assess the economic outlook at its next MPS on November 9.
  • The change of Governor, as Graeme Wheeler officially steps down on September 26 and Grant Spencer assumes an interim role for six months, is not expected to have an impact on the outlook for monetary policy. We expect it will be business as usual with Spencer already closely aligned with current policy settings and unlikely to want to rock the boat.
  • As such, we expect the RBNZ to leave the cash rate unchanged on Thursday at 1.75% and maintain a neutral tone in its accompanying statement. We expect that the closely-watched final paragraph of the release will stay the same, suggesting that 'Monetary policy will remain accommodative for a considerable period'.