Preview of the Reserve Bank of New Zealand meeting announcement due 2100GMt on Wednesday 9 September 2015
- That's Thursday morning (10 September 2015) local NZ time 9am
- The decision will be accompanied by the September Monetary Policy Statement
- Five minutes after all this, RBNZ Governor Wheeler will begin his press conference
Adam did a great preview here: Preview: RBNZ will cut but the key is what happens next
Mine is going to be much briefer
- Bloomberg has surveyed 17 economists ... all of them expect a rate cut by 25 basis points
- That will bring the Official Cash Rate (OCR) to 2.75% from 3% now
- The current GDP forecast from the bank is at 3.1% y/y. This is likely to be cut to around 2.7%
- The huge fall in dairy prices (albeit with a recent bounce) is a major influence on RBNZ policy
- Watch for comments on global growth and global market volatility
- Watch also for comments on the future direction of monetary policy, its widely expected that there is at least one more 25bpm cut coming this year
- On the currency, the RBNZ is likely to mention its fall favourably. Inflation is low in NZ. Ordinarily a falling currency should impact to increase inflation, but this has not been a problem for the RBNZ. There is thus a risk that they again 'jawbone' the currency lower. If a lower currency results in building inflation pressures, it would not be unwelcome by the bank, so the risk for trash talk on the NZD is high.
- If they don't jawbone the currency lower there is a high risk for a NZD rally ... the speculative market is rather short.
