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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.

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:

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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