RBNZ keeps the OCR unchanged at 5.50% as expected, while it noted that a restrictive monetary policy stance remains necessary to further reduce capacity pressures and inflation
Says:
- New Zealand economy continues to evolve as anticipated by the Monetary Policy Committee.
- Economic growth in New Zealand remains weak.
- Committee is confident that maintaining the OCR at a restrictive level for a sustained period will return consumer price inflation to within the 1%-3% target range this calendar year.
RBNZ Minutes:
- Members agreed they remain confident that monetary policy is restricting demand.
- Restrictive monetary policy is contributing to an easing in capacity pressures to ensure inflation returns to target.
- Further decline in capacity pressure is expected, supporting an ongoing decline in inflation.
- Members agreed they remain confident that monetary policy is restricting demand.
- Measures of business confidence have declined and firms’ own expectations for activity and investment have weakened.
- Near-term business pricing intentions have declined but remain elevated, in part reflecting an uptick in both realized and expected costs.
- Continued strength in net migration is supporting aggregate consumer spending and rising dwelling costs.
- The committee agreed that interest rates need to remain at a restrictive level for a sustained period.
- Members agreed that the balance of risks was little changed since February.
- Members agreed that there remains limited tolerance to increase the time to achieve the inflation target while inflation remains outside the target band and while inflation expectations and pricing intentions remain elevated.
- Members agreed that persistence of services inflation remains a risk and goods price inflation remains elevated.
- Ongoing restrictive monetary policy in an environment of weak global growth could lead to a more rapid decline in inflation than expected.
Reaction details (03:11)
- NZD/USD was choppy in an immediate reaction to the decision although it then rose by 20 pips to 0.6076 from 0.6056 in the 3 minutes after the announcement before paring the move shortly after.
Analysis details (03:16)
RBNZ kept the OCR unchanged at 5.50% which was unanimously expected, while it kept to its hawkish-leaning tone as it stated that a restrictive monetary policy stance remains necessary to further reduce capacity pressures and inflation with the committee confident that maintaining the OCR at a restrictive level for a sustained period will return consumer price inflation to within the 1%-3% target range this calendar year. RBNZ Minutes also noted that a further decline in capacity pressure is expected which supports an ongoing decline in inflation and members agreed that there remains limited tolerance to an increase in the time to achieve the inflation target while inflation remains outside the target band and while inflation expectations and pricing intentions remain elevated.
10 Apr 2024 - 03:00- Fixed IncomeData- Source: Newswires
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