RBNZ left OCR unchanged at 1.00% as widely expected. The overall statement was balanced with easing bias. However, there is no clear indication of another imminent rate cut. Most importantly, RBNZ noted that “developments since the August Statement had not significantly changed the outlook for monetary policy”. It suggests that the central bank is still on wait-and-see mode, for observing the impact of the -50bps rate cut in August.
Nevertheless, easing bias is maintained as “there remains scope for more fiscal and monetary stimulus, if necessary, to support the economy and maintain our inflation and employment objectives.” But the statement is seen more as urging the government for fiscal stimulus. And the level of monetary stimulus needed might depend on how much the government would do.
NZD/USD extends the recovery from 0.6255 after the release and hit as high as 0.6348 so far. Such recovery is seen as a corrective move and should be limited well below 0.6450 resistance. Break of 0.6255 is expected at a later stage and that would resume larger down trend to 0.6102 (2015 low).
