The RBNZ have held the Official Cash Rate (OCR) constant at 1.00% - this surprised the market, who were expecting a rate cut.
The NZ Dollar has rocketed higher across the board.
The key points in the RBNZ statement are:
- The committee agreed that economic developments since the August had been offsetting for the monetary policy outlook
- Noted that the risks to the economy in the near term were tilted to the downside
- Agreed it would add further monetary stimulus if economic developments warranted
- Debated the costs and benefits of keeping the OCR at 1.0% versus reducing it to 0.75%
- Agreed that both actions were broadly consistent with the current OCR projection
- Agreed reduction in the OCR over the past year was transmitting through the economy and would take time to have full effect
- Noted the bank’s work programme assessing alternative monetary policy tools in the New Zealand environment
- Noted that business surveys suggest weak growth has continued over the second half of 2019
- Agreed that accommodative monetary policy remains necessary to continue to meet their inflation and employment objectives
The NZD is higher in immediate response.
The next OCR decision, along with a full Monetary Policy Statement, will be held on the 12th February 2020.
Current indicative levels are:
NZD-USD 0.6400 / 0.6425
NZD-AUD 0.9345 / 0.9370
NZD-EUR 0.5810 / 0.5835
NZD-GBP 0.4975 / 0.500
NZD-JPY 69.70 / 69.95
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