VIEW: BNZ: RBNZ Toes The Line

BNZ write that “MPR seemed to give a subtle nod to the possibility the RBNZ might have to do more than it suggested when it produced its August MPS. Nonetheless, the key message was that the Bank thinks it has things broadly under control and sees little reason to deviate substantively from its previously stated course of action.”

• “That said the fact that “some members” of the Monetary Policy Committee seemed keen on a 75-point increase at this meeting has piqued the interest of market watchers, and rightfully so. There was certainly no mention of 25 basis points being considered. And the fact that it was “on balance” that the Committee decided to raise the cash rate by 50 basis points is notable.”
• “Moreover, while the RBNZ acknowledged the downside risks associated with faltering global growth, there was a general downplaying of any data that might suggest the RBNZ should be thinking of backing off.”
• “While the statement could be seen as being a tad more hawkish than the RBNZ’s August missive, equally, it said nothing to directly justify recent past market pricing of a cash rate peaking at around 4.75%.”