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

 

NZ: RBNZ cuts OCR by 50bps to 5.25%

Data Flash (New Zealand)

This morning the RBNZ surprised markets with a 50bps cut in the official cash rate (OCR) to 5.25%. The press statement accompanying the move is reproduced below.

Given that the RBNZ had passed up the opportunity to cut Tuesday morning, we - and the market - had assumed that the Bank would probably wait until it scheduled meeting on 3 October to adjust rates downward, most probably by 25bps. We had expected a further 25bps cut expected in November. The RBNZ's aggressive and unscheduled move - which the RBNZ notes was triggered primarily by last week's tragic events in the US - is designed to bolster confidence and is a precautionary move based on the Bank's analysis of the developments as they have unfolded so far.

At this stage we do not expect a further rate cut at the scheduled interim OCR review on 3 October. However, views regarding the global outlook remain extremely fluid and it is not difficult to envisage scenarios in which a further near-term easing move may be undertaken.

Our running assumption is that the RBNZ will take rates lower from here and we have penciled in a 25bps rate cut at 14 November Monetary Policy Statement meeting. The clear risk is that the RBNZ deliver more easing, and sooner, than this central scenario suggests. We think that the RBNZ will not hesitate to rapidly reverse these precautionary moves should the deterioration in global outlook and its impact on New Zealand prove less severe than what appears to be the RBNZ's current view. Thus some re-tightening could occur as early as Q2 2002, especially if the NZD remains around current levels.

It is worth noting that on most measures, real monetary conditions in New Zealand are now as easy as at any time in the country's recent history. They are also easier than in most developed countries, including the US, despite the fact that recent growth momentum in New Zealand has been stronger than elsewhere.

RBNZ cuts OCR to 5.25 per cent

The Reserve Bank today cut the Official Cash Rate (OCR) by 50 basis points from 5.75 per cent to 5.25 per cent.

Reserve Bank Governor Don Brash said "We are making this unscheduled interest rate cut primarily because of recent tragic events in the United States.

"It seems more likely now that the current slowdown in the world economy will worsen. In these circumstances, New Zealand's short-term economic outlook would be adversely affected, although any downturn might well be relatively short-lived.

"New Zealand business and consumer confidence will be hurt by recent international and domestic developments, and today's move is a precaution in a period of heightened uncertainty.

"Our focus, as always, is to keep core inflation in check. Our present judgement is that interest rates do not need to be as high as previously to achieve this," Dr Brash concluded.

The next scheduled review of the OCR is on Wednesday 3 October.


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 



Game Developers Association: Existing Government Measures Won’t Stop One Of Our Fastest-growing Sectors Moving To Australia

“Existing government policies won’t stop New Zealand gaming and interactive media companies from choosing to expand in Australia instead of New Zealand,” NZGDA Chairman Chelsea Rapp... More>>

DoC: A Tale Of Two Halves For Rock Wren/Tuke
It’s a tale of two halves for rock wren/tuke with their fortunes hanging on effective predator control, the latest South Island-wide survey shows. The Department of Conservation monitoring programme, now in its third year, tracks populations of this small alpine bird... More>>


TradeMe: Wages Remain Hot While Job Listings Cool Off
Salaries are skyrocketing in the regions as Kiwi employers battle to attract staff and combat the rising cost of living, according to the analysis of over 77,000 vacancies listed on Trade Me Jobs for the quarter ending 30 June (Q2)... More>>




Spark: Launch Of New Submarine Cable Expands New Zealand’s International Connectivity By Nearly 100%

Southern Cross Cables Limited (“SX”) today announced the launch of its Southern Cross NEXT fibre cable (SX NEXT), creating the largest submarine network connecting Australasia... More>>



Motor Industry Association: New Vehicle Registrations Soften

The Motor Industry Association’s Mark Stockdale says that 12,049 registrations of new vehicles for the month of June shows the market is weakening in the face of raising costs of living... More>>



MYOB: New Data Shows Increase In SMEs Experiencing Stress And Anxiety

The lingering impacts of the COVID-19 pandemic have led to a surge in the number of local SME owners and operators experiencing stress and anxiety, according to new research from business management platform, MYOB... More>>