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3 Aug 2015
RBNZ: Comfortable forecasting a low point of 2.0% - Westpac
FXStreet (Bali) - Westpac remains very comfortable forecasting a low point in the RBNZ OCR of 2.0%, disagreeing with current market pricing.
Key Quotes
"Last week Reserve Bank Governor Graeme Wheeler delivered a speech titled “Some Thoughts on the Inflation Outlook and Monetary Policy”. The speech elaborated on the messages of the July OCR review statement – chief among these being that the RBNZ is relatively cautious about reducing the OCR."
"The Governor had a pointed message for markets: “Some local commentators have predicted large declines in interest rates over coming months that could only be consistent with the economy moving into recession.”
"This suggested two things: (1) the RBNZ is not inclined to move in increments of more than 25bps, and (2) while the RBNZ seems prepared to cut the OCR again in September, it is on the fence about whether any further reduction in interest rates will be required this year."
"At present, market pricing roughly accords with the RBNZ’s views. Our own assessment differs markedly from the Reserve Bank’s (and therefore we disagree with current market pricing)."
"We remain very comfortable forecasting a low point in the OCR of 2.0%."
Key Quotes
"Last week Reserve Bank Governor Graeme Wheeler delivered a speech titled “Some Thoughts on the Inflation Outlook and Monetary Policy”. The speech elaborated on the messages of the July OCR review statement – chief among these being that the RBNZ is relatively cautious about reducing the OCR."
"The Governor had a pointed message for markets: “Some local commentators have predicted large declines in interest rates over coming months that could only be consistent with the economy moving into recession.”
"This suggested two things: (1) the RBNZ is not inclined to move in increments of more than 25bps, and (2) while the RBNZ seems prepared to cut the OCR again in September, it is on the fence about whether any further reduction in interest rates will be required this year."
"At present, market pricing roughly accords with the RBNZ’s views. Our own assessment differs markedly from the Reserve Bank’s (and therefore we disagree with current market pricing)."
"We remain very comfortable forecasting a low point in the OCR of 2.0%."