Market Summary
- RBNZ lowers OCR by 25bps to 2.0%
- NZD unmoved by RBNZ’s “timid†rate cut
- French CPI confirmed at -0.40% in July 2016
- Oil prices extends losses on build up in weekly oil inventory
- US jobless claims below 270 for sixth consecutive week
- US import prices rise 0.10% in July
- US import prices for June revised from 0.20% to 0.60%
Today’s Economic events
- RBNZ OCR 2.00% vs. 2.00%
- RBNZ releases monetary policy statement
- UK RICS house price balance 5.0% vs. 19.0%
- Australia MI inflation expectations 3.50% vs. 3.70% previously
- RBNZ Gov. Wheeler speaks
- France final CPI m/m -0.40% vs. -0.40%
- Canada NHPI m/m 0.1% vs. 0.20%
- US weekly unemployment claims 266k vs. 270k
- US import prices m/m 0.10% vs. -0.20%
Coming Up
- New Zealand Manufacturing index
- New Zealand retail sales
RBNZ cuts OCR to 2.0%, signals further easing
The Reserve Bank of New Zealand cut the overnight cash rate or OCR by 25 basis points to 2.0% as widely expected. In the statement following the rate cut announcement, the RBNZ said in a strongly worded statement that the OCR could drop even lower, with the monetary policy statement showing, “further policy easing will be required to ensure that future inflation settles near the middle of the target range.†The RBNZ’s statement also showed that the central bank was concerned with inflation and not so much with stimulating the economy as the central bank expects inflation to remain low for a long period of time.
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NZD & Trade Weighted Index (TWI)
The RBNZ forecasts that inflation could rise to 1.0% by the end of this year, trading near the lower band of the RBNZ’s 1 – 3% inflation target range with the near-term weakness in inflation coming from a stronger New Zealand dollar. On an annual basis, New Zealand’s inflation rate is expected to rise only in the second half of next year, but still, the RBNZ remained doubtful of inflation reaching the 2% mid-point target until September 2018.
