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Tone of RBNZ slightly more dovish than expected - Nomura

FXStreet (Bali) - The general tone of the RBNZ statement was slightly more dovish than expected, Charles St-Arnaud, Economist at Nomura, notes.

Key Quotes

Overall, while the RBNZ kept its policy rate on hold and reiterated that rates were to be kept unchanged for some time before being raised again, the general tone of the statement is slightly more dovish than expected."

"This in mainly the result of an increase in the downside risk to the economic outlook coming from the negative terms of trade shock caused by lower commodity prices. Until we see a concrete negative impact on growth from the lower commodity price, the RBNZ is likely to continue to point to the need for higher rates in the near future."

"We continue to believe that the policy rate will remain on hold until at least Q2 2015.The markets seem to have also interpreted the statement as slightly dovish as we have seen the NZD depreciate by 0.4% and rates rallying by about 5bp following the rates decision, with the market expecting the next rate hike in Q2 2015."

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