RBNZ: Uncertainty reigns – Westpac

Dominick Stephens, Chief Economist at Westpac, notes that the Reserve Bank of New Zealand reiterated that the OCR is expected to remain low, but gave no guidance about the timing or direction of the next move.

Key Quotes

“Overall, this Review sounded slightly more dovish than previous RBNZ communications.”

“The RBNZ’s communication style is shifting towards emphasising uncertainty.”

“The RBNZ is becoming less bullish about economic growth. We were surprised that the RBNZ shifted its view on that today.”

“In the bigger picture, the RBNZ’s forecasts and financial market pricing are converging on our long-held views. The economy will be mixed in 2018, and the OCR will not need to rise until November 2019.”

“The RBNZ assessed the Government’s May Budget as less stimulatory for the economy than previous forecasts. We disagree with that.”