Wednesday, October 14, 2015

RBNZ Governor Wheeler holds on to easing bias – TDS

FXStreet (Delhi) – Prashant Newnaha, Rates Strategist at TD Securities, notes that in today’s speech from RBNZ, Governor Wheeler offered no new information, with a repeat of the easing bias “Some further easing in the OCR seems likely”.

Key Quotes

“We thought the Governor could have been more dovish, and lift the odds of an October cut from the 25% as is priced now.”

“Three aspects of today’s speech clearly hint at an October 29 pause at 2.75% (a) “Recent economic indicators have been more encouraging” the bounce in dairy prices is key; (b) “we remain conscious of the impact that low interest rates can have on housing demand” as recent reports have been scorching, as has net migration inflow (c) “the need to have sufficient capacity to cut interest rates if the global economy slows significantly” i.e. keep your powder dry for a ‘real’ emergency.”

“(2) The Key/English government announced a budget surplus for 2014-15 of $NZ414m via better nominal GDP growth and lower expenditure growth. If only Australia could at least manage the latter!”
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