More from the RBNZ: price indices signal a continued decline in consumer price inflation

The Reserve Bank of New Zealand cut its cash rate by half a percent, headlines here:

RBNZ cuts cash rate by 50bp, as widely expected

From the minutes to the RBNZ meeting:

The committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.The committee agreed that excess capacity has dampened inflation expectations, and price and wage changes are now more consistent with a low-inflation environment.Members agreed that an OCR of 4.75 percent is still restrictive and leaves monetary policy well-placed to deal with any near-term surprises.New Zealand’s annual consumer price inflation is assessed to currently be within the committee’s 1 to 3 percent target band and is expected to converge to the target midpoint.The committee discussed the respective benefits of a 25-basis point versus a 50-basis point cut in the OCR.The committee agreed that domestic activity is weak.They agreed that a 50-basis point cut at this time is most consistent with the committee’s mandate of maintaining low and stable inflation.The committee agreed that the economic environment provided scope to further ease the level of monetary policy restrictiveness.High-frequency indicators point to continued subdued growth in the near term.Labour market conditions are expected to ease further.The committee agreed that monthly price indices signal a continued decline in consumer price inflation in New Zealand.Financial conditions remain restrictive, and credit demand remains subdued.

NZD/USD lower:

This article was written by Eamonn Sheridan at www.forexlive.com.

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