Reserve Bank of New Zealand moentary policy meeting outcome

Official Cash Rate remains on hold at 2.75%

  • Further easing seems likely, depends on data
  • Sharp fall in dairy prices weighing on farm incomes
  • Growth in services is robust
  • House price inflation in Auckland remains strong
  • Says that if the NZD keeps moving up this would require a lower rate path
  • RBNZ concerns about China and Asian growth
  • Recent rise in dairy prices is helping business and consumer sentiment

That comment on the New Zealand dollar is quite pointed, that's the most significant thing I've seen in the statement so far. Everything else is pretty much on script and as expected. The currency comment is indicative of RBNZ concern over a rising NZD and is a hint at the potential for RBNZ intervention. The RBNZ have very clear guidelines on when they will intervene.

The RBNZ easing bias remains, no surprise there. No guarantee that there will be a cut in December, the next meeting (the 10th).

More to come

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