RBNZ March Monetary Policy Statement

Data Flash (NZ) RBNZ March Monetary Policy Statement

14 March 2001

RBNZ
Dec MPS, DB Expectations for March MPS, ActualMarch MPS

Official Cash Rate 6.50% 6.50% %

90d TWI 90d TWI 90d TWI
H2 2000 6Ÿ 48Ÿ 6.7 49.0 6.7 47.7
H1 2001 7 47Ÿ 6Ÿ 50Ÿ 6Ÿ 50Ÿ
H2 2001 7 49 6Ÿ 51Ÿ 6Ÿ 51Ÿ
H1 2002 7Ÿ 50Ÿ 6Ÿ 52Ÿ 6Ÿ 52Ÿ
H2 2002 7Ÿ 51Ÿ 7 53Ÿ 6Ÿ 53Ÿ

RBNZ
Dec MPS DB Expectations for March MPS Actual
March MPS

GDP (Mar yrs, aa%)
2001 2Ÿ 2Ÿ 2Ÿ
2002 3Ÿ 2Ÿ 3Ÿ
2003 3Ÿ 3Ÿ 3Ÿ

CPI (qoq%)
Mar qtr 2001 0.7 0.2 -0.1
Jun qtr 2001 n/a 0.5 0.6

CPI (yoy%)
March 2001 4 3Ÿ 3.2
March 2002 2 1Ÿ 1.4
March 2003 1Ÿ 1Ÿ 1.3

The RBNZ lowered the OCR by 25 bps to 6.25%. The RBNZ noted that the decision was finely balanced. Considering that the published projections are consistent with an OCR of 6.5%, it can be concluded that the Bank made the decision to lower the OCR in the last few days, after the document was printed. Governor Brash noted that it should not be automatically concluded that further cuts would follow.

The RBNZ calls the decision an insurance easing in the light of the global risks, which could pull GDP down below the 3.5% assumed for the current year. At this stage, we do not expect this cut to be followed by further rate reductions. GDP data for Q4 will print stronger than expected by the Bank (1% vs around 0.5%) and the RBNZ's Q1 CPI forecast of -0.1% qoq looks optimistic. Furthermore, with the pass-through of the 8% qoq rise in Q4 import prices and pressure from the renewed fall in the NZD, we expect the RBNZ to soon become concerned about the inflation outlook.

Ulf Schoefisch, Chief Economist, (64) 9 351 1375

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