February Statement News Today

RBNZ leaves Official Cash Rate at 5.5%, but says domestic inflation is slow to fall and now puts a 60% chance of a further OCR hike by the end of this year; now doesn't see inflation getting back under 3% till the fourth quarter of the year

Today's RBNZ update leaves us comfortable for now with our forecast of a first policy easing in February next year, followed by only gradual policy easing thereafter. Future inflation data will be key in driving our OCR view with the risk that easing comes later than currently expected.

We don't expect any significant change to the RBNZ's "Watch, Worry and Wait" strategy it has been following since the May 2023 Monetary Policy Statement.

The RBNZ left the OCR at 5.5% as expected. The record of the meeting states that the risks to the outlook were viewed as "little changed" since the February Statement.

The Monetary Policy Committee today agreed to leave the Official Cash Rate (OCR) at 5.50 percent. The New Zealand economy continues to evolve as anticipated by the Monetary Policy Committee. Current consumer price inflation remains above the Committee's 1 to 3 percent target range. A restrictive monetary policy stance remains necessary to further reduce capacity pressures and inflation.

Reading the tea leaves on one of the shortest and least revealing statements in many years, economists warn that the Reserve Bank has maintained a hawkish...

The information flow has been very light since the February Monetary Policy Statement - hence we don't think the RBNZ's monetary policy stance will have changed much since February. We expect no change in the OCR, with the decision to be accompanied by a relatively short statement that suggests little change in the OCR outlook from that communicated in the February Statement. We expect the RBNZ will:

For the RBA, today’s update provides further confirmation that the labour market is indeed easing. That said, in its February Statement on Monetary Policy, the RBA continued to assess the labour market as “tight relative to what is consistent with full employment”. More updates on the state of the labour market will be necessary before any material adjustment to that assessment occurs, especially given the seasonality associated with January’s figures.

Dollar declined broadly overnight, US Treasury's borrowing plan for Q1 that spurred rally in the stock market, propelling it to new record highs while simultaneously exerting downward pressure on yields. Despite this shift, the greenback remains largely within its recent trading range. Market participants seem to be holding the substantial bets for now, awaiting the outcome of FOMC rate decision scheduled for tomorrow. Furthermore, the upcoming non-farm payroll data on Friday is also expect...

RBNZ Chief Economist Paul Conway struck a hawkish tone in a speech today, tempering market expectations for imminent policy easing. Conway acknowledged the effectiveness of current monetary policy in slowing the economy and reducing inflation. But he emphasized noted that the journey to achieving the target midpoint is far from over. His remarks also indicated that recent weaker GDP data would not automatically lead to a dovish shift in RBNZ's approach.