Reserve Bank of New Zealand will halt additional LSAP purchases by July 23 2021

  • cash rate unchanged at 0.25%
  • MPC agreed to reduce current stimulatory level of monetary settings
  • to keep funding for lending programmes unchanged
  • level of monetary stimulus could now be reduced
  • to halt additional asset purchases under the large scale asset purchase (LSAP) programme by 23 July 2021
  • says medium-term inflation and employment would likely remain below its objectives
  • level of monetary stimulus could now be reduced to minimise the risk of not meeting its mandate
  • recent data indicate the new zealand economy remains robust
  • in absence of any further significant economic shocks, more persistent consumer price inflation pressure is expected to build over time
  • uncertainties remain as to the pace and magnitude of any pass-through of costs to medium-term inflation
  • reiterated that there will be near-term spikes in headline cpi inflation in the June and September quarters
  • these reflect factors that are either one-off in nature or temporary

The RBNZ were expected to dial back their easing rhetoric, indicating tightening to come i the months ahead. The Bank has gone beyond that with the LSAP move (bolded above). In doing so the Bank has come out more on the hawkish side than was widely expected. NZD/USD has been marked up and is sitting just shy of 0.7000.

Link to the RBNZ release: