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RBNZ Deputy Governor Bascand raises possibility of rate cut
The Reserve Bank of New Zealand Deputy Governor Geoff Bascand has spoken with reporters on the RBNZ’s proposals to increase bank capital requirements.
His key points were:
• Proposals could raise borrowing costs and
ultimately lead to tighter monetary
conditions
• This may require a cut to
the OCR (official cash rate)
• “If
we were worried…and thinking we may have an economy
that’s undershooting inflation or undershooting maximum
sustainable employment, we’d offset it with an OCR
change”
The RBNZ is proposing that
banks be require to raise high-quality Tier-1 capital to 16%
of overall risk-weighed assets – almost double the current
regulatory requirement.
Banks have said the consequences of the proposals could lead to slower credit growth, higher borrowing costs and weaker economic growth.
The OCR currently stands at 1.75%
NZD is lower across the board in response.
Current indicative levels are:
NZD-USD 0.6765 /
0.6790
NZD-AUD 0.9540 /
0.9565
NZD-EUR 0.5965 /
0.5990
NZD-GBP 0.5185 /
0.5210
NZD-JPY 74.90 /
75.15
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