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12 Mar 2015
RBNZ outcome, much firmer - Westpac
FXStreet (Guatemala) - Sean Callow, analyst at Westpac Banking corporation concentrated on the the quarterly Monetary Policy Statement, when the RBNZ left the OCR unchanged at 3.5% and retained its deadpan neutral guidance for future OCR moves, as expected by most (but not all) economists.
Key Quotes:
"If anything, the RBNZ was even more firm that it does not intend to move the OCR in either direction for the foreseeable future. The RBNZ appears to have made a more conscious effort to guide market pricing with this Monetary Policy Statement. The 90-day interest rate projection was flat for its entirety - but the projection was one year shorter than usual (March 2017 -70bp to 3.7%, near expectations). This was presumably done to hide the fact that the RBNZ is projecting an eventual rise in the OCR, for fear that markets might overreact. This is a "make no mistake" policy statement - the RBNZ is on hold."
"The RBNZ repeated its comment that the high exchange rate is unjustified and unsustainable. However, instead of saying that a significant depreciation is "expected", the RBNZ now says a significant depreciation is "needed". Given the mixed nature of this statement, market reaction was mixed. NZD/USD bounced from 0.7200 to 0.7250 initially, then as high as 0.7307 during the press conference."
"AUD/NZD tumbled from 1.0520 to 1.0420. However, interest rate markets did not react to the statement."
Key Quotes:
"If anything, the RBNZ was even more firm that it does not intend to move the OCR in either direction for the foreseeable future. The RBNZ appears to have made a more conscious effort to guide market pricing with this Monetary Policy Statement. The 90-day interest rate projection was flat for its entirety - but the projection was one year shorter than usual (March 2017 -70bp to 3.7%, near expectations). This was presumably done to hide the fact that the RBNZ is projecting an eventual rise in the OCR, for fear that markets might overreact. This is a "make no mistake" policy statement - the RBNZ is on hold."
"The RBNZ repeated its comment that the high exchange rate is unjustified and unsustainable. However, instead of saying that a significant depreciation is "expected", the RBNZ now says a significant depreciation is "needed". Given the mixed nature of this statement, market reaction was mixed. NZD/USD bounced from 0.7200 to 0.7250 initially, then as high as 0.7307 during the press conference."
"AUD/NZD tumbled from 1.0520 to 1.0420. However, interest rate markets did not react to the statement."