RBNZ held OCR unchanged at 0.25% as widely expected. The Large Scale Asset Purchase program is also kept at a maximum of NZD 100B by June 2022. The action is “necessary to further lower household and business borrowing rates in order to achieve the Committee’s inflation and employment remit.”
RBNZ also made progress on deploying additional monetary instruments, including “a Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets.” It noted that “a package of an FLP and a lower or negative OCR could provide an effective way to deliver additional monetary stimulus.”
On the economy, RBNZ expects “a rise in unemployment and an increase in firm closures, as resource reallocation continues”. Significant monetary policy support is needed “for a long time”. In the minutes, it also noted that “further monetary stimulus may be needed” to help achieve its remit objectives and promote financial stability.
Some volatility is seen in NZD/USD after the release but it’s, after all, still extending the fall from 0.6797. Further decline is expected for 0.6488 support. The case of topping at 0.6797 is building up, with bearish divergence condition in daily MACD, and repeated failure to sustain above 0.6755 resistance. Firm break of 0.6488 will confirm that it’s at least correcting the rise from 0.5469 and should target 38.2% retracement at 0.6290.