22 Jan 2015
RBA and RBNZ to join the easing club sooner than expected – Westpac
FXStreet (Mumbai) - After the Bank of Canada’s surprise rate cut decision, many central banks including the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) may join in the easing club with possible rate cut, amid bleak global growth outlook this year coupled with widespread lower inflation prospects.
Key Quotes – Westpac:
"So the slide in AUD in response to the BoC probably needs to be seen in the context of nervousness over the RBA outlook,"
He suggested that Canada's decision adds it to the list of central banks revising their policy stance, as low inflation is depressed further by the tumble in oil and natural gas prices.
Moreover, RBNZ could join the easing club sooner-than-expected.
Wespac economists moved their projected date for the next RBNZ hike from Mar 2016 to Jun 2016 but markets are pricing -9 basis points of easing risk this year.
"At the very least, the RBNZ should drop its reference to the prospect of further rate hikes and reiterate its view that the kiwi is too overvalued."
Key Quotes – Westpac:
"So the slide in AUD in response to the BoC probably needs to be seen in the context of nervousness over the RBA outlook,"
He suggested that Canada's decision adds it to the list of central banks revising their policy stance, as low inflation is depressed further by the tumble in oil and natural gas prices.
Moreover, RBNZ could join the easing club sooner-than-expected.
Wespac economists moved their projected date for the next RBNZ hike from Mar 2016 to Jun 2016 but markets are pricing -9 basis points of easing risk this year.
"At the very least, the RBNZ should drop its reference to the prospect of further rate hikes and reiterate its view that the kiwi is too overvalued."