VIEW: RBNZ Leaves MonPol Unch. For Now, Hints At FLP This Year

Westpac publishes their initial comments on the RBNZ monetary policy decision: "The Reserve Bank left monetary policy unchanged, as anticipated. The LSAP cap remains at $100bn, and the OCR remains at 0.25%. However, the RBNZ strongly hinted that it will loosen monetary policy further by introducing a Funding for Lending Programme (FLP – basically low-interest loans to banks) by the end of this year. The RBNZ remains extremely pessimistic on the economy. There was very little acknowledgement of recent stronger data. In particular, the Committee was divided on the housing market upturn, with some members arguing that it would soon fizzle out due to rising unemployment. Consistent with its pessimistic stance on the economy, the RBNZ concluded that "further monetary stimulus may be needed" – as strong a hint as the Monetary Policy Committee could possibly give. The Committee directed the Bank to prepare to have an FLP ready to deploy before the end of the calendar year. Design details of the programme would be agreed and published ahead of deployment."