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Breaking: A 'hawkish' RBNZ leaves OCR on hold at 1.0% (NZD jumps to 0.6442 resistance)

Editors note: This is a developing story – more to come...

In its first policy meeting since 13 November, the Reserve Bank of New Zealand, (RBNZ), which was universally expected to hold its Offical Cash Rate (OCR) at 1%, but at the same time signal that they stand ready to cut the OCR should that be required by the coronavirus situation, has delivered a slightly hawkish no-change decision as follows leading the kiwi to rally:

RBNZ interest rate decision

  • OCR on hold at 1.0%.
  • No chance of a rate cut in 2020.

What had been expected

Markets were in anticipation of this meeting, but were more concerned about the forward guidance, universally expecting the RBNZ to be on hold.

Analysts at Westpac, prior to the meeting, argued that "if coronavirus quickly blows over like SARS did, then the RBNZ can revert to an on-hold outlook for the OCR at its next communique. Should economic disruptions from coronavirus intensify, the RBNZ may consider cutting the OCR to help offset any negative impact on employment. Markets are 60% priced for a rate cut by June."

NZD/USD analysis 

Before the announcements: NZD/USD Price Analysis: How will the RBNZ affect NZD/USD?

After the announcements: NZD/USD was sat at just above the 0.64 handle into the meeting with the immediate resistance at 0.6420 and 0.6450 while the downside levels were 0.6390 and 06370. The outcome prior to the Press Conference, NZD/USD has jumped to 0.6442 resistance.

Key notes from the MPS

The Monetary Policy Statement, (MPS), 

  • 11-Feb-2020 19:00:01 - RBNZ SEES OFFICIAL CASH RATE AT 1.89% IN MARCH 2023
  • 11-Feb-2020 19:00:01 - RBNZ SEES TWI NZD AT AROUND 72.2% IN MARCH 2021 (PVS 71.5%)
  • 11-Feb-2020 19:00:01 - RBNZ SEES OFFICIAL CASH RATE AT 1.03% IN MARCH 2021 (PVS 0.9%)
  • 11-Feb-2020 19:00:01 - RBNZ SEES OFFICIAL CASH RATE AT 1.01% IN JUNE 2020 (PVS 0.9%)
  • 11-Feb-2020 19:00:01 - RBNZ SEES OFFICIAL CASH RATE AT 1.1% IN JUNE 2021 (PVS 0.94%)
  • 11-Feb-2020 19:00:01 - RBNZ SEES ANNUAL CPI 1.7% BY MARCH 2021 (PVS 1.7%)

 

 

New Zealand RBNZ Interest Rate Decision meets expectations (1%)

New Zealand RBNZ Interest Rate Decision meets expectations (1%)
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