Restrictive Policy Settings To Be Maintained

The RBNZ's April monetary policy decision has delivered few surprises. The central bank noted: "Overall, members agreed that the balance of risks was little changed since the February Statement." See this link for the full April statement.

• The central bank sees the need to maintain a restrictive policy stance for a sustained period to ensure that inflation returns to target in the 2024 calendar year.
• Recent growth outcomes have come in close to expectations, with economic growth described as weak, although this is likely necessary to ensure that capacity pressures are reduced further, which in turn will aid the return to the inflation target.
• Upside and downside risks to the inflation outlook were discussed, with some modest upside risks noted for Q1. Although as per above there has been little change in the balance of risks versus the Feb meeting.
• The RBNZ again noted there is limited tolerance for any increase in time to achieve the inflation target (again this point was also made at the February policy meeting).
• All in all, the RBNZ clearly sees it as being too early for a dovish shift in terms of the outlook. Whilst the bar to hike further is clearly elevated, the statement didn't give any hints that the restrictive policy stance will be changed in the near term.
• Note the next RBNZ meeting is on the 22nd of May. In terms of data releases between now and then, Q1 CPI prints on Apr 17. Wages and employment figures are out on May 1, then inflation expectations on May 13.