LOGIN JOIN SHARECAFE SIGN UP FOR OUR NEWSLETTER ADVERTISE
share cafe logo  
 
SHARECAFE COMMENTARY

Dovish RBNZ Prepared To Cut Rates
BY GLENN DYER - 29/06/2018 | VIEW MORE ARTICLES BY GLENN DYER

The Reserve Bank of NZ has made it clear that it is prepared to cut rates as much as lift them in its latest policy announcement where it kept the official cash rate on hold at 1.75% for yet another meeting.

“…we are well positioned to manage change in either direction – up or down – as necessary,” newish Governor, Adrian Orr’s statement on Thursday said in the first setence of the statement (to make readers aware of its importance).

"Domestically, ongoing spending and investment, by both households and government, is expected to support growth. However, the recent weaker GDP outturn implies marginally more spare capacity in the economy than we anticipated. The Government’s projected spending impulse is also slightly lower and later than anticipated.

"CPI inflation is likely to increase in the near term due to higher fuel prices. Beyond that, inflation is expected to gradually rise to our 2 percent annual target, resulting from capacity pressures.

"The best contribution we can make to maximising sustainable employment, and maintaining low and stable inflation, is to ensure the OCR is at an expansionary level for a considerable period.

"Our outlook for the New Zealand economy, as detailed in the May Monetary Policy Statement, remains intact. Employment is around its sustainable level and consumer price inflation remains below the 2 percent mid-point of our target, necessitating continued supportive monetary policy for some time to come”

"Global economic growth is expected to support demand for our products and services. Global inflationary pressure is also expected to be higher but remain modest. This outlook has been tempered slightly by trade tensions in some major economies. Ongoing volatility in some emerging market economies continues,” the RBNZ Governor said in yesterday’s statement.

That in fact sounds very much like the sentiments coming from the Reserve Bank of Australia and Governor Phil Lowe.

Australia is not the isolated economy as some critics of the Reserve Bank’s current policy suggest.



View More Articles By Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.



 

SHARECAFE VIDEO


Ironbark Karara discuss Altium (ASX:ALU)

More video   

RECENTLY ADDED TO SHARECAFE


 › Market At Midday On Friday
 › Burning Questions Over Avita, Polynovo Valuations
 › The Market Doesn't Care What Price You Paid
 › Getting Started With The Basics
 › Next Week At A Glance
 › The Overnight Report: Off The Boil
 › TCL - Citi rates the stock as Sell
 › S32 - Macquarie rates the stock as Outperform
 › CMA - Morgans rates the stock as Add
 › ACCC Delays Transurban Decision
 › Manganese Drives South32 North
 › OZ Minerals Keeps Shareholder Faith
 › Santos Shifts Closer To Dividend Payout
 › NSW Leads Jobs Rebound In June
More ShareCafe   

GET THE SHARECAFE BREAKFAST BRIEFING


Delivered free to your inbox before the market opens each trading day. Sign up below +