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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI PREVIEW: RBNZ Seen On Hold, May Soften Outlook On Data
By Lachlan Colquhoun
LONDON (MNI) - The Reserve Bank of New Zealand is expected to leave
interest rates on hold Wednesday, with little change in their accompanying
statement, although there is an outside chance it may turn more dovish,
reflecting the weaker domestic economic data.
Along with keeping the Official Cash Rate at a record low 1.75%, the RBNZ
is expected to repeat its February policy statement, when the RBNZ reintroduced
a more balanced rate outlook, saying "the direction of our next OCR move could
be up or down," adding that it expected to leave the rate unchanged "through
2019 and 2020", extending the period at which it sees rates on hold from
November's "into 2020".
This took the RBNZ's stance back to that seen in August, having added a
hawkish tilt in November by removing the "up or down" phrase from the statement.
GDP data for Q4 2018, published March 21, showed the economy grew 0.6% q/q,
with annualised growth at 2.3%, down from 2.6% in Q3. This is significantly
lower than RBNZ expectations of 3.0% growth for the year.
Even unemployment has picked up, rising to 4.3% from 3.9%.
Governor Adrian Orr is set to make a major speech on the RBNZ's new policy
setting framework on Friday, at which more details of the Bank's emerging
outlook may be revealed. The next Statement on Monetary Police is due with an
OCR decision on May 8.
--CAPITAL REQUIREMENT INCREASE
Another factor which could create conditions for the RBNZ to consider a
rate cut is the phasing in of new capital requirements for banks, which will
likely send commercial lending rates higher.
While the RBNZ assessment is that the controls, which would lift capital
ratios for the major four banks from 12% to 16% and smaller banks to 15%, could
see market rates increase by 20 to 40 basis points the analyst community
believes the impact will be higher.
Any rise in lending rates in a slowing economy would be inconvenient timing
for the RBNZ, with MNI understanding that in this scenario it would be forced to
look seriously at a rate cut as a next move.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MMNRB$,M$A$$$,M$N$$$,MT$$$$,MX$$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.