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Bears Hold All The Cards

RBNZ
RBNZ: REPEAT: POV: RBNZ Gov Could Be Risking A Communication Mishap
- RBNZ Gov Orr's tenure has been dominated by sharp changes in policy rhetoric
and such swings in language introduce the risk of a communication mishap, if
mkts fail to understand the language at first glance.
- Orr has introduced 2-way interest rate risk via the opening paragraph of the
statement that accompanies the RBNZ's decision, by employing the phrase "the
direction of our next OCR move could be up or down." However, he continues to
conclude with phraseology close to "we will keep the OCR at an expansionary
level for a considerable period to contribute to maximising sustainable
employment, and maintaining low & stable inflation". In spite of a fairly
consistent underlying message, Orr made wholesale changes to the text & the
latest statement omitted reference to biz confidence, a focus of recent rhetoric
(though the RBNZ did note that its econ assessment is virtually unch vs Aug).
- The smoothest path for RBNZ MonPol/communique would see the econ evolve in
line with the RBNZ's expectation, recent GDP figures & biz investment intentions
suggest this may not play out.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com