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RBNZ condition full 25bps hike in Q4 2020, revised down GDP forecasts

New Zealand Dollar tumbles broadly and sharply after RBNZ announcement turned out to be more dovish than expected. The Official Cash Rate is held unchanged at 1.75%. OCR is expected to be kept low, “but for longer”, through 2019 and into 2020. RBNZ also reiterated that the next move “could be up or down”.

According to the new Monetary Policy Statement (MPS), RBNZ is now conditioning a full 25bps hike to 2.00% in December quarter of 2020. That’s notably later than March quarter in 2020 as in May MPS.

GDP growth forecasts were revised down to 2.7% in 2018 (2.8% in May MPS), 2.6% in 2019 (3.1%), 3.4% in 2020 (3.3%) and 3.2% in 2021 (3.1%).

CPI forecasts were kept unchanged at 1.1% in 2018, 1.6% in 2019, 1.8% in 2020, and 2.0% in 2021.

Full August MPS

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