No change to the Official Cash Rate (OCR) from the Reserve Bank of New Zealand, as was unanimously expected
- OCR left at 1.75%
- Says policy will remain accommodative for considerable period
- Says fall in NZD TWI is encouraging, if sustained would help to rebalance growth to tradables
Projections:
- Sees official cash rate at 1.8 pct in September 2017 (previously 1.8 pct)
- sees official cash rate at 1.8 pct in June 2018 (previously 1.8 pct)
- sees official cash rate at 1.8 pct in September 2018 (previously 1.8 pct)
- sees official cash rate at 2.0 pct in June 2020
- sees NZD TWI at around 75.2 pct in June 2018 (previously 77.2 pct)
- sees annual CPI 1.4 pct by June 2018 (previously 1.4 pct)
More:
- Says monetary policy will remain accommodative for considerable period
- Developments since February on balance considered to be neutral for monetary policy stance
- Numerous uncertainties remain and policy may need to adjust accordingly
- House price inflation has moderated further, moderation projected to continue
- Headline inflation to reach midpoint of target band over medium term
- Long-term inflation expectations remain anchored at around 2 pct
- Recent increase in headline inflation temporary
- Growth outlook remains positive
With thanks to Reuters for those quick headline points
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There was a reasonable chance the bank would adopt more of a tightening bias, but they are pretty clear here they have a neutral bias still. NZD has dropped on this ... here is the one-minute chart:
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Here is the Statement by Reserve Bank Governor Graeme Wheeler:
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 1.75 percent.
Global economic growth has increased and become more broad-based over recent months. However, major challenges remain with on-going surplus capacity and extensive political uncertainty.
Stronger global demand has helped to raise commodity prices over the past year, which has led to some increase in headline inflation across New Zealand's trading partners. However, the level of core inflation has generally remained low. Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward.
The trade-weighted exchange rate has fallen by around 5 percent since February, partly in response to global developments and reduced interest rate differentials. This is encouraging and, if sustained, will help to rebalance the growth outlook towards the tradables sector.
GDP growth in the second half of 2016 was weaker than expected. Nevertheless, the growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity.
House price inflation has moderated further, especially in Auckland. The slowing in house price inflation partly reflects loan-to-value ratio restrictions and tighter lending conditions. This moderation is projected to continue, although there is a risk of resurgence given the continuing imbalance between supply and demand.
The increase in headline inflation in the March quarter was mainly due to higher tradables inflation, particularly petrol and food prices. These effects are temporary and may lead to some variability in headline inflation over the year ahead. Non-tradables and wage inflation remain moderate but are expected to increase gradually. This will bring future headline inflation to the midpoint of the target band over the medium term. Longer-term inflation expectations remain well-anchored at around 2 percent.
Developments since the February Monetary Policy Statement on balance are considered to be neutral for the stance of monetary policy.
Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.
AND ... The Bank also with their Monetary Policy Statement (full text is here)
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Coming at 2200GMT - Governor Wheeler's press conference (livestream will be here)
Wheeler will also answer question in front of a parliamentary committee today, that's at 0110GMT
