Could the RBNZ ease? - BNZ

In view of Stephen Toplis, Head of Research at BNZ, a purely mechanistic approach to monetary policy would now argue for a cut in New Zealand’s cash rate.

Key Quotes

“At the time of the May Monetary Policy Statement, RBNZ spokespeople were clear in their message that there was an equal chance of a rate cut as a rate hike. Since that time the balance of economic data that we have received suggests that the RBNZ should be lowering its CPI inflation forecasts to levels that are not only well below the mid-point of the RBNZ’s target band but staying there for some time.

• Inflation surprisingly low
• Currency surprisingly high
• And building activity may trigger alternate RBNZ  scenario
• RBNZ will surely not adopt a tightening bias
• But ever strengthening economy does not need more stimulus.”