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XE Data Update - RBNZ Official Cash Rate Decision

The RBNZ will keep the Official Cash Rate (OCR) at 0.25%.

The key points in the RBNZ statement are:

  • RBNZ keeps the OCR unchanged at 0.25%
  • Maintain the LSAP (large scale asset purchase) at NZD$60 billion.
  • Committee prepared to use additional monetary policy tools /stimulus if necessary
  • Committee will review LSAP at regular intervals
  • Balance of economic risks to the downside
  • Rising NZD$ has put further pressure on export earnings
  • Monetary Policy will continue to provide “significant support”
  • The negative economic impact on New Zealand is exacerbated by the required international border restrictions, as the vast majority of the world battles to contain the pandemic.
  • RBNZ committed to meeting inflation and employment mandate
  • Committee discussed the pros and cons of expanding the LSAP programme now
  • Any expansion of policy would need to be driven by the economic outlook and assessment of the effectiveness of the programme
  • A change in size of the programme would also need to be of sufficient magnitude to make a meaningful difference
  • Staff are working towards a broader range of monetary policy tools would be deployable in coming months
  • Tools include a term leaning facility, reductions in the OCR, and foreign asset purchases, as well as reassessing the appropriate quantum of the current LSAP
  • Possible negative outcomes from the global pandemic remain severe and larger than any near-term upside surprises
  • Not yet clear whether the monetary stimulus delivered to date is sufficient to meet its mandate
  • The negative economic impact on New Zealand is exacerbated by the required international border restrictions, as the vast majority of the world battles to contain the pandemic.
  • The severe global economic disruption caused by the COVID-19 pandemic is persisting, leading to lower economic activity, employment, and inflation abroad and in New Zealand
  • New Zealand has contained the spread of COVID-19 locally for now, enabling a relaxation of social restrictions and an earlier resumption of domestic economic activity than assumed in our May Monetary Policy Statement.
  • The Government's intended fiscal stimulus, announced in its May Budget, was also slightly larger than we assumed.
  • These outcomes give cause for some confidence, but significant economic challenges remain.
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The NZD is lower in immediate response.

The next OCR decision will be held on the 12th August 2020

.Below is link to the RBNZ press release:

https://www.rbnz.govt.nz/news/2020/06/monetary-policy-easing-to-continue

Current indicative levels are (market pricing is wide):

NZD-USD 0.6470 / 0.6495

NZD-AUD 0.9310 / 0.9335

NZD-EUR 0.5715 / 0.5740

NZD-GBP 0.5165 / 0.5190

NZD-JPY 68.90 / 69.15

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