Central Banks

Further comments by RBNZ’s governor Adrian Orr

  • Exchange rate has followed terms of trade
  • Realisation that central bank is to retain policy stance is filtering through to markets and that is pushing NZD lower
  • Core inflation has been slow to respond to low rates
  • Core inflation is a bit below where the central bank would like it to be
  • In no rush to move rate in either direction
  • Seems that “our message on rates is getting through”

Maintaining policy stance is one thing, but I believe the statement earlier (which opens up the possibility of a rate cut) is providing the market with a fresh rethink of the RBNZ’s future move in rates.

I still believe the next move will be a rate hike, and the RBNZ’s message earlier is mainly just trying to tone down expectations for that – so as to not pressure themselves into a specific time to do so.

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