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RBNZ leaves rate unchanged at 2.75%, further easing“seems likely”

FXStreet (Córdoba) - The Reserve Bank of New Zealand announced its decision to leave the official cash rate (OCR) unchanged at 2.75% in October, following three consecutive cuts to fight deflationary pressures and weaken the NZD. The decision was anticipated by analysts.

However, the RBNZ stated that additional easing measures are likely and that continued appreciation of NZD would require a lower rate path.

“The exchange rate has been moving higher since September, which could, if sustained, dampen tradables sector activity and medium-term inflation. This would require a lower interest rate path than would otherwise be the case”, said the RBNZ in a statement.

“To ensure that future average CPI inflation settles near the middle of the target range, some further reduction in the OCR seems likely”, said the bank. “This will continue to depend on the emerging flow of economic data. It is appropriate at present to watch and wait”.

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NZD/USD was mixed after the RBNZ unchanged 2.75% further easing seem likely and a rate cut depends on emerging data flow. Initially the bird jumped on the release as a cut was priced in, but then supply took over again while the RBNZ also jawboned the bird by suggesting the sustained Kiwi dollar rise would require a lower rate path.
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