VIEW: Westpac: Eyes On The Prize

Westpac note that “he key point to take from today’s statement is that the RBNZ is firmly focused on setting monetary policy for local conditions.”

• “The RBNZ is certainly not insensitive to the darkening outlook for the global economy. Indeed, it’s notable that of the two options for the OCR that were discussed today, the more conservative option won out.”
• “Nor does the RBNZ appear to have been swayed much one way or another by what its overseas peers are doing.”
• “On the other hand, there was very little chance of the RBNZ following the example of its Australian counterpart, which surprised many by scaling back to a 25 basis point hike at yesterday’s review. Among other things, the RBA cited the fact that Australia is not seeing the same degree of wage inflation as in other advanced economies. New Zealand is very much one of those ‘others’.”
• “Today’s decision doesn’t change our thinking on the OCR. It’s quite possible that the Committee will again discuss a 75 basis point move in November – not least because of the unusual three-month gap until the next scheduled review. But on balance we see a 50 point move as the more likely option.”