New Zealand central bank shifts to neutral tone and warns of growth risks

New Zealand’s central bank struck a neutral tone as it marked two full years of steady policy on Thursday, saying its next move would depend on how the economy fared and cautioned of downside risks to growth from global trade frictions. As widely expected, the Reserve Bank of New Zealand kept the official cash rate (OCR) at 1.75 percent, where it has remained since late 2016, and reiterated it expected to hold rates into 2020. The central bank removed a line from its previous statements that its


New Zealand’s central bank struck a neutral tone as it marked two full years of steady policy on Thursday, saying its next move would depend on how the economy fared and cautioned of downside risks to growth from global trade frictions. As widely expected, the Reserve Bank of New Zealand kept the official cash rate (OCR) at 1.75 percent, where it has remained since late 2016, and reiterated it expected to hold rates into 2020. The central bank removed a line from its previous statements that its
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Company: cnbc, Activity: cnbc, Date: 2018-11-08  Authors: mark coote, bloomberg, getty images
Keywords: news, cnbc, companies, global, zealand, economic, tone, risks, neutral, growth, central, bank, ocr, cut, shifts, warns, trade, rate, inflation


New Zealand central bank shifts to neutral tone and warns of growth risks

New Zealand’s central bank struck a neutral tone as it marked two full years of steady policy on Thursday, saying its next move would depend on how the economy fared and cautioned of downside risks to growth from global trade frictions.

The New Zealand dollar rallied briefly and bonds sold off as the markets priced out any chance of a near term rate cut and instead focused on when New Zealand would join some of its global counterparts in raising rates.

As widely expected, the Reserve Bank of New Zealand kept the official cash rate (OCR) at 1.75 percent, where it has remained since late 2016, and reiterated it expected to hold rates into 2020.

“The timing and direction of any future OCR move remains data dependent,” Governor Adrian Orr said in a statement, and in a press conference later in the day he refused to rule out a rate cut if economic conditions deteriorated.

The central bank removed a line from its previous statements that its next rate move could be either up or down, but noted both upside and downside risks remained to growth and inflation projections.

“We don’t agree that the RBNZ needs to maintain the fence-sitting dual approach to policy,” said Citibank economist Paul Brennan.

“While our own forecasts show a near-term moderation in GDP growth, we expect CPI inflation to exceed the RBNZ’s latest forecasts and maintain the view that the OCR will need to rise from Q3 next year.”

A run of stellar economic data including a surprise drop in third-quarter jobless rate to 10-year lows, better-than-expected growth and inflation numbers over recent months, has given the RBNZ some breathing room.

However, Orr pointed to temporary factors for the pick-up in second-quarter economic growth and cautioned of headwinds to growth.

“Weak business sentiment could weigh on growth for longer. Trade tensions remain in some major economies, raising the risk that trade barriers increase and undermine global growth.”

The New Zealand dollar hit a fresh three-month high of $0.6820 immediately after the rate decision but quickly retreated from those levels to last hover around $0.6785.

Government bonds were sold off for a second straight day as investors priced out the risk of a cut with yields on the long-end of the curve up about 5 basis points.


Company: cnbc, Activity: cnbc, Date: 2018-11-08  Authors: mark coote, bloomberg, getty images
Keywords: news, cnbc, companies, global, zealand, economic, tone, risks, neutral, growth, central, bank, ocr, cut, shifts, warns, trade, rate, inflation


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New Zealand central bank keeps interest rates steady, warns of slowing growth and trade tensions

New Zealand’s central bank kept interest rates steady on Thursday and warned of rising risks to the outlook as growth slows and global trade frictions escalate, signalling its resolve to maintain record-low rates for some time. The RBNZ’s statement had a slightly more dovish tone than taken at its meeting in May, adding warnings over recent weakness in economic growth and the potential fallout from escalating trade tensions among major economies. “The recent weaker gross domestic product (GDP) o


New Zealand’s central bank kept interest rates steady on Thursday and warned of rising risks to the outlook as growth slows and global trade frictions escalate, signalling its resolve to maintain record-low rates for some time. The RBNZ’s statement had a slightly more dovish tone than taken at its meeting in May, adding warnings over recent weakness in economic growth and the potential fallout from escalating trade tensions among major economies. “The recent weaker gross domestic product (GDP) o
New Zealand central bank keeps interest rates steady, warns of slowing growth and trade tensions Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-06-28  Authors: mark coote, bloomberg, getty images
Keywords: news, cnbc, companies, bank, rbnz, warns, rates, interest, global, tensions, slightly, growth, zealand, recent, trade, steady, dovish, slowing, zealands, keeps, rate


New Zealand central bank keeps interest rates steady, warns of slowing growth and trade tensions

New Zealand’s central bank kept interest rates steady on Thursday and warned of rising risks to the outlook as growth slows and global trade frictions escalate, signalling its resolve to maintain record-low rates for some time.

The dovish tone of the Reserve Bank of New Zealand’s (RBNZ) statement, which nodded to a recent run of weak data, reaffirmed market expectations that no rate hike was on the near-term horizon and even led some analysts to project a slim but possible chance of a rate cut.

The central bank held the official cash rate at 1.75 percent for the 11th straight review as it works to boost inflation to 2 percent, the center of its target band.

The RBNZ’s statement had a slightly more dovish tone than taken at its meeting in May, adding warnings over recent weakness in economic growth and the potential fallout from escalating trade tensions among major economies.

“The recent weaker gross domestic product (GDP) out turn implies marginally more spare capacity in the economy than we anticipated,” it said.

Trade tensions in some major economies also “tempered slightly” prospects that robust global demand will underpin New Zealand’s economy, the RBNZ said in its strongest warning to date of the harm the such frictions could inflict on trade and business activity.

“What we’ve got in our judgment is slightly on the dovish side,” said Nick Tuffley, chief economist at ASB Bank.

“If we don’t see any material improvement in business confidence or we see a lot more impact coming through from global trade tensions, you can’t rule out a cut either.”

The RBNZ said monetary policy will remain expansionary “for a considerable period of time”, underscoring a dominant market view that there will be no rate hike until mid-2019 at the earliest.


Company: cnbc, Activity: cnbc, Date: 2018-06-28  Authors: mark coote, bloomberg, getty images
Keywords: news, cnbc, companies, bank, rbnz, warns, rates, interest, global, tensions, slightly, growth, zealand, recent, trade, steady, dovish, slowing, zealands, keeps, rate


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