ANZ analysis of the Reserve Bank of New Zealand policy announcement today, this in summary:
- RBNZ today retained a dovish tone about the medium-term outlook, while acknowledging and welcoming robust recent data
- It “must remain prepared” to provide additional support if necessary
- There was no change to the OCR, forward guidance, or OCR forecasts. However, the unconstrained OCR track suggested the RBNZ now considers around 100bp less stimulus necessary
- Funding for Lending Programme (FLP) will launch in December, with relatively few strings attached, with loans for a three-year duration
- Despite the RBNZ’s ongoing dovish rhetoric, the evolving balance of risks suggests less justification for rushing into a negative OCR. We are now forecasting an RBA-style 15bp cut to 0.10% at the May MPS, with a highly conditional further 35bp cut in August taking the OCR to -0.25%.
Bolding mine.
Markets are reading similar implications, pricing out a negative OCR and taking NZD up:
