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

 


RBNZ face challenging decision on Thursday

RBNZ face challenging decision on Thursday


By Garry Dean (Sales Trader, CMC Markets New Zealand)

The key focus for the New Zealand dollar will be the Reserve Bank on Thursday morning, with the market widely expecting the OCR to be increased 25 pts to 3.25%. The variance among market forecasters sits around the revisions contained within the June Monetary Policy Statement, and more importantly the projected trail of OCR increases going forward. While Governor Wheeler’s forecasts in March suggested an OCR at 4.50% by the end of 2015, the market has digested a number of weaker economic releases over the past three months, and are currently pricing-in a rate closer to 4.00% at this time.

This expectation of more moderate OCR increases has led major trading banks to reduce two year fixed mortgage rates by over a quarter of a percent in the past couple of months, and this creates headwinds for the RBNZ in their battle to control non-tradable inflation pressures. The RBNZ decision is certainly a tough call given the declines seen in both business and consumer confidence recently, combined with the 23% collapse in dairy prices over the past four months, but a significant easing in OCR projections would potentially fuel another surge in the housing market. The inability of the government to appropriately address the key factors behind the surge in Auckland property prices has left the Reserve Bank Governor with a major dilemma, and one which is extremely hard to resolve through the use of LVR restrictions and OCR increases.

With the RBNZ only likely to adjust their interest rate projections slightly, there is a risk the market has adopted too dovish a tone, with interest rates and the Kiwi at risk of adjusting higher post the announcement. We saw the Kiwi rally significantly following the first two OCR hikes in this cycle, resulting in a threat of currency intervention from the RB Governor in early May, but potential exists for a similar short-term spike in the currency post the announcement. A bearish technical picture of the Kiwi had been building with the break of key support at 0.8500 at the end of May, but recent spikes to 0.8555 have clouded this view, and leaves the door open for a renewed push higher if the RBNZ disappoints the market on Thursday.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news