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RBNZ: Low NZ inflation gives plenty of scope to stay neutral - RBS

FXStreet (Bali) - According to RBS FX Strategists, last week's lower-than-expected headline inflation in New Zealand gives the RBNZ plenty of scope to maintain its neutral stance.

Key Quotes

"The Reserve Bank of New Zealand (RBNZ) holds its October policy meeting, which will not include updated forecasts. Lower-than-expected headline inflation gives the RBNZ plenty of scope to maintain its neutral stance, which notes that a “period of assessment” on the policy rate is needed after the Bank increased the policy rate by 1.0% in 2014."

"The RBNZ may be unwilling to make significant changes to its monetary policy stance before completing its Financial Stability Review on November 12th."

"The RBNZ will review the merits of the macroprudential measures introduced to cool home price inflation, which have proven to be effective. In terms of reducing inflation pressure, RBNZ Governor Wheeler said the measures equate to a 25-50bp policy rate
hike."

"The RBNZ also releases currency intervention data for September – we expect the RBNZ still sees the NZD as both unsustainable and unjustified, implying that intervention may have continued."

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