Quick reaction from Westpac on the RBNZ (bolding mine):
- The RBNZ’s Monetary Policy Statement … reinforced its explicit tightening bias – a hawkish surprise to the markets
The most important change, from the market’s point of view, was a reinsertion of the explicit tightening bias into the one-page press release: “Some further increase in the OCR is expected to be required at a later stage.” This explicit bias was removed from the press release in October. The market was looking for a further watering down of the implicit bias.
- The RBNZ downgraded the interest rate forecast
- The previous warning about the high NZD exchange rate was repeated: “The exchange rate does not reflect the decline in export prices this year and remains unjustifiably and unsustainably high. We expect to see a further significant depreciation.”
