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29 Jan 2016
RBNZ OCR: Wait and see mode – Goldman Sachs
FXStreet (Delhi) – Research Team at Goldman Sachs, notes that the RBNZ left the OCR unchanged at 2.5% in January as was expected by all surveyed local economists (including GS).
Key Quotes
“While the RBNZ flagged downgrades to its headline inflation forecasts, acknowledged a weaker global backdrop , “many risks around the outlook” and has maintained a clear easing bias, the broad sweep of commentary in today’s statement did not suggest the central bank was positioning for a near term rate cut.
Rather, the bank’s description of the domestic outlook (quite optimistic), financial conditions (easier), house prices (still a risk to financial stability), the drought (no longer specifically identified as a risk), and inflation (prioritising the view that core is consistent with target and expectations “stable”) all suggest to us that the most likely scenario is that the RBNZ remains on hold through 2016.
That said, the risk of additional easing is material and we will be watching for signs of a breakdown in inflation expectations, surveyed sentiment, and broader activity over the coming months.”
Key Quotes
“While the RBNZ flagged downgrades to its headline inflation forecasts, acknowledged a weaker global backdrop , “many risks around the outlook” and has maintained a clear easing bias, the broad sweep of commentary in today’s statement did not suggest the central bank was positioning for a near term rate cut.
Rather, the bank’s description of the domestic outlook (quite optimistic), financial conditions (easier), house prices (still a risk to financial stability), the drought (no longer specifically identified as a risk), and inflation (prioritising the view that core is consistent with target and expectations “stable”) all suggest to us that the most likely scenario is that the RBNZ remains on hold through 2016.
That said, the risk of additional easing is material and we will be watching for signs of a breakdown in inflation expectations, surveyed sentiment, and broader activity over the coming months.”