NZD: RBNZ Keeps Interest Rate Steady at 5.50%
The RBNZ hold the rates at 5.5% for the 6th consecutive meeting in a row, they are focused to control the target of inflation to 2% by this year. 4.7% inflation sustaining now till the Q4 of 2023, it is the 2.5 years low of inflation. Last day Business confidence of Q1 slumped to 25% it is drastically fall in the Business firms view. So August month Rate cuts are expected from the RBNZ in the economists view.
NZDUSD is moving in Ascending channel and market has reached higher high area of the channel
Following the conclusion of the April policy meeting on Wednesday, the Reserve Bank of New Zealand (RBNZ) announced its decision to maintain the Official Cash Rate (OCR) at 5.50%, aligning with market expectations.
In its Monetary Policy Statement (MPS) summary, the RBNZ highlighted the anticipated trajectory of the New Zealand economy. The committee reiterated the necessity of a restrictive monetary policy stance to alleviate capacity pressures and control inflation. Despite weak economic growth in New Zealand, the committee expressed confidence that persisting with the OCR at a restrictive level would facilitate a return of consumer price inflation to the target range of 1 to 3 percent within the current calendar year.
During the interest rate meeting, committee members discussed the effectiveness of the current monetary policy in curbing demand and alleviating capacity pressures to steer inflation back to target levels. They acknowledged the decline in business confidence and weakened expectations for activity and investment. While near-term business pricing intentions decreased, they remained elevated due to rising costs.
The committee recognized the support to aggregate consumer spending from continued strength in net migration and rising dwelling costs. Emphasizing the need for a sustained restrictive monetary policy, the members deliberated on the balance of risks, acknowledging the limited tolerance for prolonged deviation from the inflation target while inflation expectations and pricing intentions remained elevated.
Members also discussed the persisting risk of services inflation and the elevated goods price inflation. They noted the potential for a more rapid decline in inflation than expected due to ongoing restrictive monetary policy amid a backdrop of weak global growth.
Overall, the RBNZ’s decision to maintain the OCR at 5.50% reflects its commitment to managing inflationary pressures and fostering economic stability in New Zealand.
NZD: RBNZ Keeps OCR Steady at 5.5%
The RBNZ hold the rates at 5.5% for the 6th consecutive meeting in a row, they are focused to control the target of inflation to 2% by this year. 4.7% inflation sustaining now till the Q4 of 2023, it is the 2.5 years low of inflation. Last day Business confidence of Q1 slumped to 25% it is drastically fall in the Business firms view. So August month Rate cuts are expected from the RBNZ in the economists view.
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The Reserve Bank of New Zealand (RBNZ) has maintained its official cash rate (OCR) at 5.5 percent for the sixth consecutive meeting, signaling a steadfast approach to addressing inflationary pressures.
Economists’ predictions were in line with the RBNZ’s decision, as they anticipated no change to the benchmark rate since the cessation of rate hikes in May of the previous year.
The central bank emphasized the ongoing need for high interest rates to effectively manage inflation, which had moderated slightly from its two-year low of 4.7 percent recorded at the close of the previous year. Both consumers and businesses were observed to be exercising caution in their expenditure.
Despite the prevailing weakness in the economy, the RBNZ acknowledged lingering short-term inflationary pressures. The Monetary Policy Committee affirmed its confidence that sustaining the OCR at a restrictive level over an extended period would bring consumer price inflation back within the target range of 1 to 3 percent by the end of the current calendar year.
In February, the RBNZ’s projections for the OCR indicated minimal likelihood of a rate cut before mid-2025.
The RBNZ’s concise statement reflected its assessment that little had changed economically or financially since its previous statement in February.
Kiwibank’s chief economist, Jarrod Kerr, noted that the RBNZ was unlikely to adjust policy at this juncture, with May also offering slim prospects for change.
Recent surveys indicating declines in business and consumer confidence were attributed to cautious spending by households, alongside reduced sales and orders impacting profits.
ANZ’s chief economist, Sharon Zollner, highlighted potential inflationary pressures from both domestic and overseas sources, such as oil prices. However, she suggested that the RBNZ’s concern would not materialize in the immediate term.
Upcoming releases of the consumer price index for the first quarter of the year, followed by labor market data, were identified as crucial factors influencing the RBNZ’s stance in the upcoming May monetary policy statement.
Despite financial markets projecting at least two rate cuts by year-end, it was reiterated that the RBNZ would likely maintain its cautious approach, with cuts not expected until 2025.
NZD: OCR Decision: Unchanged, Hike Requires ‘Very High Threshold’
The RBNZ hold the rates at 5.5% for the 6th consecutive meeting in a row, they are focused to control the target of inflation to 2% by this year. 4.7% inflation sustaining now till the Q4 of 2023, it is the 2.5 years low of inflation. Last day Business confidence of Q1 slumped to 25% it is drastically fall in the Business firms view. So August month Rate cuts are expected from the RBNZ in the economists view.
AUDNZD is moving in Descending Triangle and market has reached lower high area of the pattern
The Reserve Bank of New Zealand (RBNZ) has revealed its latest strategy in combating inflation, opting to maintain the official cash rate (OCR) at 5.5 percent. Persistent inflationary pressures were cited as the primary rationale behind this decision.
The announcement, although expected by many, was accompanied by the central bank’s assertion that its monetary policy measures were effective and would ultimately steer New Zealand’s economy back into the desired inflation zone of 1 to 3 percent within the current year.
According to the RBNZ’s monetary policy review, the current consumer price inflation remains above the committee’s target range, necessitating the continuation of a restrictive monetary policy stance to alleviate capacity pressures and curb inflationary trends.
While acknowledging ongoing feeble economic growth in New Zealand, the central bank expressed confidence that sustaining the OCR at a restrictive level over an extended period would lead to a return of consumer price inflation within the target range by the end of the calendar year.
Additionally, the RBNZ addressed global economic conditions, noting below-trend economic growth globally and the cautious approach of major central banks towards monetary policy easing due to persistent inflation risks.
Today’s cash rate announcement precedes the release of the next major inflation data, the consumers price index, by one week. Market reaction to the announcement was subdued, with the New Zealand dollar showing a slight firming to US60.65c from US60.56c before the release. Wholesale interest rates remained mostly unchanged, reflecting a consensus that today’s announcement mirrored the previous RBNZ statement issued in February.
Despite market expectations of a potential OCR cut by August, most inflation measures are still trending higher than desired, with the pace of decline in price pressures remaining slow, according to CoreLogic NZ chief property economist Kelvin Davidson.
Earlier assessments by economists had anticipated the RBNZ’s cautious approach, given persistent inflationary pressures and underperforming economic indicators. Most economists foresee the next OCR move to be a cut, likely occurring in November, amidst signs of broadening financial stress in various sectors of the economy, including retail sales decline and increased business insolvencies. However, there are also positive indications, such as small and medium-sized business operators expressing greater confidence in the economy, suggesting a mixed economic outlook for New Zealand.
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