The Reserve Bank of New Zealand announcement will be on 23 September 2020 at 0200 GMT.
- Will provide info on any move from the Bank on its OCR, forward guidance and LSAP
- However, a no change policy is widely expected
Earlier:
- RBNZ monetary policy meeting preview (unchanged expected)
- NZ finmin Robertson says the RBNZ is committed to 0.25% until March 2021
- BNZ meet this week - preview - Shadow board favour QE over negative OCR
Kiwibank in brief, say:
- the OCR and LSAP are likely to remain unchanged
And from there the note from the bank gets really interesting. Its a detailed note, but in summary :
- The so-called "package" of a negative OCR (NIRP) and a bank funding for lending programme (FLP) may get more airtime. The RBNZ are positioning the "package" as the next monetary policy manoeuvre. But we want it unwrapped.
- We recommend unpackaging the deal, and going with what works without (major) consequences. Focus on the FLP now, and consider NIRP later. We have been banging the drum on a bank FLP as the next best tool in the shed. The good thing about the FLP, is the timing. The RBNZ has committed to doing nothing with the OCR until March 2021. The FLP could be started in November, to get the ball rolling. And if FLP is not enough...
- The RBNZ seem adamant in their need to go negative, even with an early and effective use of the FLP. We believe the RBNZ has seen enough to warrant taking such a risk. Although we disagree, the RBNZ are likely to take the cash rate negative next year. As we outlined a few years back, if we were to execute the strategy of NIRP, we would want to beat market pricing. If you're going to execute NIRP, it must be done with some bluster.
- A 75bp cut to -0.5% in February is expected, and more likely than April (or May), in our view.
Bolding is the bank's, and to reiterate, Kiwibank do not see this at the meeting Wednesday.
RBNZ Gov. Orr
