The Reserve Bank of New Zealand cut its cash rate by half a percent, headlines here:
From the minutes to the RBNZ meeting:
- The committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.
- The committee agreed that excess capacity has dampened inflation expectations, and price and wage changes are now more consistent with a low-inflation environment.
- Members agreed that an OCR of 4.75 percent is still restrictive and leaves monetary policy well-placed to deal with any near-term surprises.
- New Zealand’s annual consumer price inflation is assessed to currently be within the committee’s 1 to 3 percent target band and is expected to converge to the target midpoint.
- The committee discussed the respective benefits of a 25-basis point versus a 50-basis point cut in the OCR.
- The committee agreed that domestic activity is weak.
- They agreed that a 50-basis point cut at this time is most consistent with the committee’s mandate of maintaining low and stable inflation.
- The committee agreed that the economic environment provided scope to further ease the level of monetary policy restrictiveness.
- High-frequency indicators point to continued subdued growth in the near term.
- Labour market conditions are expected to ease further.
- The committee agreed that monthly price indices signal a continued decline in consumer price inflation in New Zealand.
- Financial conditions remain restrictive, and credit demand remains subdued.
NZD/USD lower:
