Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

RBNZ May MPS - Instant View

Data Flash (New Zealand)

RBNZ May MPS - Instant View

The RBNZ tightened by 50 bps to 6.50% and foreshadowed 90 day rates to rise to 7.5% over the next 12 months - consistent with a cash rate of 7.25-7.50%.

A continued strong growth performance over 2000 (Q2 seen as +1.1% qoq after Q1 of +0.6% qoq) underpins the interest rate outlook, with inflation pressure rising on the back of a positive output gap. Nevertheless, the RBNZ sees inflation to rise to no more than 1.8% over coming years.

The exchange rate seen as making only a modest contribution to the tightening. A lack of a significant interest differential as in the last cycle is seen as the reason for the lacklustre NZD perfpormance.

The RBNZ expects the interest tightening to slow the economy sufficiently during the later part of the forecast period, capping the tightening cycle at around 7.5%.

We see considerable upside risks to the Bank's inflation track - with the weak currency and rising world import prices providing the greatest threat. With the RBNZ unlikely to push the interest rate tightening cycle beyond 8%, we expect the result to be higher inflation over coming years than projected today by the RBNZ - somewhere in the 2.0-2.8% range.

Market reaction within first half hour: the NZD weakened (down 30 bps to 04720), while 90 day rates firmed 4 bps to 6.81%. The long end remained unchanged.

A more detailed analysis will follow later.

Ulf Schoefisch, Chief Economist

This, along with an extensive range of other publications, is available on our web site http://research.gm.db.com

In order to read our research you will require the Adobe Acrobat Reader which can be obtained from their website http://www.adobe.com for free.

For answers to your EMU questions, check Deutsche Bank's EMU web site http://www.db.com/emu or email our helpline business.emu@db.com.


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Manawatu-Whanganui Projects: PGF Top-Up To Rural Broadband Roll-Out

The government has effectively raided the $3 billion Provincial Growth Fund to top up the budget for the second phase of its rural broadband initiative, filling in mobile 'black spots' and ensuring broadband is available to marae that don't have access now. More>>

ALSO:

Other Windy Cities: Auckland-Chicago Named A Top 10 ‘Most Exciting’ New Route

The inclusion of Auckland-Chicago on Lonely Planet’s Where to fly in 2019? The 10 most exciting new flight routes list comes just two weeks before Air New Zealand prepares to celebrate its inaugural flight to Chicago’s O’Hare International Airport on 30 November. More>>

Deadly Strain: ESR Ups Its Reporting On Meningococcal Disease

The increasing number of cases of Group W Meningococcal disease (MenW) has prompted ESR to increase its reporting on the disease to the Ministry of Health. ESR has upped its reporting to weekly. More>>

ALSO:

Very Small Things: "Game-Changing" 3D Printing Technology Launched

New Zealand microfabrication researchers Andrea Bubendorfer and Andrew Best, the co-inventors of a new way of fabricating very small things with Laminated Resin Printing (LRP), are part of Callaghan Innovation’s MicroMaker3D team launching the new patent pending technology in the US this week. More>>

ALSO: