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RBNZ to delay policy easing – Deutsche

FXStreet (Córdoba) - According to analysts from Deutsche Bank the Reserve Bank of New Zealand is most likely to delay policy easing until December, after the quarterly Monetary Policy Statement.

Key Quotes:

“The RBNZ has recently indicated that it still expects to ease policy further, in a close call we think that it is most likely that the RBNZ will (needlessly) delay that policy easing until the MPS review on 10 December. “

“Our impression – confirmed by the Governor’s recent speech – is that the RBNZ is reluctant to lower interest rates too quickly, especially considering still strong activity in the housing market. The RBNZ also appears to see some merit in ‘keeping its powder dry’ in the event of a significant downturn in the global economy.”

“We think it will take clear evidence of a much weaker labour market (data due 4 November) and/or a more dovish tilt in the RBNZ’s outlook for the NZ frontend to push pricing below where it has been trading for the past month or so. That may come in time, but unless the RBNZ cuts in October it seems the NZ front-end is likely to maintain its stability for a while yet.”

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