Monetary policy announcement from the Reserve Bank of New Zealand

Cut to 2%, as was widely expected

  • RBNZ sees 90-day bank bill avg 2.1 pct dec 2016 (pvs 2.2 pct)
  • Says further policy easing may be needed
  • Sees 90-day bank bill avg 2.0 pct March 2017 (pvs 2.2 pct)
  • Monetary policy to remain accommodative
  • Sees 90-day bank bill avg 1.8pct June 2017 (pvs 2.1 pct)
  • RBNZ says closely watching economic data
  • Sees annual CPI +1.0pct December 2016 (pvs +1.3 pct)
  • Says a decline in NZD is needed
  • Sees TWI NZD at around 75.9 by December 2016

Quick headlines via Reuters

I wrote in my preview that a cut of 25 bps will not be enough to hold the NZD down, the 25 bp cut was widely expected and telegraphed. Any Dip in NZD will be bought. (ADDED - and I should note plenty of traders here were saying the same thing in the comments - kudos all).

1 minute NZD chart:

The move is a good lesson in market dynamics - a surprise cut in rates will have a different impact to a well-telegraphed cut as we've just seen from the RBNZ.

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Still to come:

  • Press conference from Governor Wheeler soon (scheduled for 2200GMT)
  • And he appears beore a parliamentary committee at 0110GMT