NZ: RBNZ’s economic assessment was soothing - TDS

Research Team at TDS, suggests that the RBNZ’s scattergun approach to forward guidance since the hawkish July 7 RBNZ Spencer speech has not sat well to date, but today’s Economic Assessment was soothing. 

Key Quotes

“In summary, the Bank sees enhanced global growth risks and an even lower inflation profile compared with June, both justifying an August cut to 2%. We pushed our Aug cut into Nov after the unexpectedly hawkish July 7 speech, but reserved the right to revert.  After the combination of today’s EA and the unexpected bringing forward of fresh macro-prudential tools, we now exercise that right. With the 11 Aug MPS we expect a -25bp cut to 2%, and the bank bill profile to be lowered to hint at a sub-2% outcome into 2017.  We see this as the most prudent combination to keep downward pressure on the exchange rate over the coming months.

Net migration for June was a punchy +5670, May was revised up to take annual migration to a fresh record.”