RBNZ: Improvement in clarity - Westpac

The RBNZ has shaken up the form of its Monetary Policy Statement with an improvement in clarity, but the actual OCR outlook is much the same with the OCR remaining firmly on hold, explains Dominick Stephens, Chief Economist at Westpac.

Key Quotes

“The RBNZ came right out and stated that employment is currently close to the maximum sustainable level. That took guts, and is tantamount to telling the Government that its target of 4% unemployment is not currently achievable on a sustained basis.”

“There was much discussion of how the labour market will influence the OCR in future.”

“The RBNZ cited the risk of overheating the labour market as a reason to eschew OCR cuts.”

“The RBNZ all but ignored the housing market and exchange rate in the MPS.”

“We continue to expect no change in the OCR until November 2019.”