Wednesday, October 28, 2015

RBNZ to leave rates unchanged - RBS

FXStreet (Delhi) – Brian Daingerfield, FX Trading Strategist at RBS, expects that the RBNZ may leave rates unchanged this week ahead of the December forecast update.

Key Quotes

“Governor Wheeler’s October 14th speech seemed to suggest that the outlook for the benchmark rate was becoming more balanced, as the RBNZ remains concerned about how lower interest rates could encourage higher home price inflation.”

“If the RBNZ does deliver a 25bp rate cut to 2.5%, which certainly can’t be ruled out given the Governor’s repetition in late September that further easing seems likely, the statement may signal the RBNZ is entering a “wait and see” stance on the economy and inflation before determining whether interest rates will need to drop below the post-crisis lows.”

“Importantly, Governor Wheeler did not talk down the currency in his October 14th speech, but since that speech dairy prices slipped at auction for the first time in five weeks. A resumption of jawboning the NZD could weaken the currency.”
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