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11 Dec 2015
NZD: RBNZ shifts to hibernation mode – Goldman Sachs
FXStreet (Delhi) – Research Team at Goldman Sachs, notes that the RBNZ cut the OCR by -25bp to 2.50%, as was widely expected by surveyed economists (including GS) but priced as just a 65% probability in financial markets.
Key Quotes
“Importantly, in our view, the RBNZ also used the accompanying MPS to signal a likely end to the 2015 easing cycle. To be clear, the RBNZ has retained an easing bias and does focus on a number of major risks to the outlook. However, this easing bias is mild at best, and the description of risks now includes a number to the upside. There is also an important sense in which the RBNZ is more focused on the limits and lags of monetary and broader concerns about financial stability.”
“Overall, the update suggests to us that the hurdle to further easing is relatively high in the near-term. While we do have sympathy with view that the RBNZ may ultimately be drawn into further easing in 2016, we believe the most likely outcome is unchanged rates - even if growth does end up disappointing.”
Key Quotes
“Importantly, in our view, the RBNZ also used the accompanying MPS to signal a likely end to the 2015 easing cycle. To be clear, the RBNZ has retained an easing bias and does focus on a number of major risks to the outlook. However, this easing bias is mild at best, and the description of risks now includes a number to the upside. There is also an important sense in which the RBNZ is more focused on the limits and lags of monetary and broader concerns about financial stability.”
“Overall, the update suggests to us that the hurdle to further easing is relatively high in the near-term. While we do have sympathy with view that the RBNZ may ultimately be drawn into further easing in 2016, we believe the most likely outcome is unchanged rates - even if growth does end up disappointing.”