RBNZ Official Cash Rate is cut by 0.25% to 1.75%
The RBNZ have cut the Official Cash Rate (OCR) by 0.25% to a new record low of 1.75%. This was widely expected, however most attention is being paid to the accompanying statement.
The key points in the RBNZ statement are:
Reserve Bank of NZ cuts Official Cash Rate target 0.25% to 1.75%
Monetary policy will continue to be accommodative
Sees NZD TWI (trade weighted Index) around 75.1% in Dec 2017 (previously 74.4%) – it currently stands at 79.16.
Sees annual CPI 1.7 pct by Dec 2017 (previously +1.6%)
Decline in the exchange rate is needed
NZD is higher than sustainable
Projections suggest cut enough to support growth, CPI
Numerous uncertainties remain
International outlook uncertain
Policy may need to adjust to international uncertainty
Inflation expected to rise on rate cuts
House price inflation remains excessive
Auckland house prices has softened, but unclear if move will be sustained
Uncertainty around future dairy prices
Global political uncertainty high
Global market volatility elevated
The NZD jumped higher in immediate response.
The next OCR decision will be held on 9th February 2017.
Below is link to the full RBNZ statement:
The RBNZ holds a press conference at 10am, followed by Governor Wheeler testimony before the Finance & Expenditure Select Committee at 1:10pm.
Current indicative levels are:
NZD-USD 0.7320 /
NZD-AUD 0.9565 / 0.9590
NZD-EUR 0.6690 / 0.6715
NZD-GBP 0.5885 / 0.5910
NZD-JPY 77.50 / 77.75