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

 


Data Flash (New Zealand) RBNZ reduces OCR to 6.00%

Data Flash (New Zealand) RBNZ reduces OCR to 6.00%

Key points

As expected unanimously by the market and market economists, the RBNZ cut its official cash rate by 25bps to 6%. The RBNZ issued a short statement - reproduced below - setting out the rationale for this decision.

As in March, concerns about the global economy, and its likely downstream impact on domestic medium-term inflation pressures, played a major role in the Bank's decision to ease. In a similar vein to its March Monetary Policy Statement, the Bank noted that there were strong grounds for being cautious about further cuts, with some of the disinflationary impact of weak global growth likely to be offset by the weak level of the NZD (if sustained) and the buoyant level of New Zealand's export commodity prices, and with significant parts of the economy operating near to capacity.

Nonetheless, we expect the RBNZ to reduce the OCR by a further 25bps to 5.75% on 16 May. A 50bp cut can not be ruled out, but would likely require weaker than expected international data, further significant downward revisions to consensus forecasts of global growth or additional evidence of a significant downturn in domestic confidence indicators.

The key data releases over the next four weeks are the NAPM and payrolls data in the US, employment data in Australia, and the NBNZ business survey, Household Labour Force Survey and Quarterly Employment Survey in New Zealand. The performance of global equity markets will also be watched with interest. RBNZ Statement: Reserve Bank cuts OCR to 6%

Reserve Bank Governor Don Brash today cut the Official Cash Rate from 6.25 per cent to 6 per cent, but in doing so he indicated that there were strong grounds for being cautious about further cuts.

Dr Brash said: "The main reason for cutting the OCR again is slowing growth in New Zealand's main trading partners. This slowdown in global growth will have an adverse impact on demand for our exports, and is likely to reduce inflationary pressures in New Zealand.

"However, world prices for our commodities remain robust, and the exchange rate has fallen back since March. These unexpected developments, if they persist, could take much of the disinflationary sting out of weakening global demand.

"In addition, significant parts of the economy are operating near to capacity and the labour market is relatively tight.

"It is for these reasons that we are only cautiously moving the OCR in the same direction as official interest rates in other countries. We will be assessing the emerging data carefully and will next review the OCR at the May Monetary Policy Statement to be released on 16 May," Dr Brash concluded.

Darren Gibbs, Senior Economist, New Zealand,

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

If you would like to be removed from our mailing lists please contact your usual Deutsche Bank representative.

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Onetai Station: Overseas Investment Office Puts Ceol & Muir On Notice

The Overseas Investment Office (OIO) has issued a formal warning to Ceol & Muir and its owners, Argentinian brothers Rafael and Federico Grozovsky, for failing to provide complete and accurate information when they applied to buy Onetai Station in 2013. More>>

ALSO:

Tomorrow, The UN: Feds President Takes Reins At World Farming Body

Federated Farmers president Dr William Rolleston has been appointed acting president of the World Farmers’ Organisation (WFO) at a meeting in Geneva overnight. More>>

ALSO:

I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>

ALSO:

Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>

Earlier:

Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>

ALSO:

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news