RBNZ cuts OCR by 0.25% to 3.25% - NZD smashed lower

RBNZ cuts OCR by 0.25% to 3.25% - NZD smashed lower

The RBNZ have cut the Official Cash Rate (OCR) by 0.25% to 3.25%. The market was evenly divided between a rate hike and staying pat.

The key points in the RBNZ statement are:

• RBNZ cuts the OCR by 0.25% to 3.25%
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• Says rate cut needed given low inflation
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• Further easing may be appropriate
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• Further moves depend on data
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• Regulation changes to ease pressure on house prices
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• Weak dairy prices, high fuel prices weigh on incomes
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• Sees NZ inflation back in 1% to 3% target bank by Q1 2016
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• Little evidence NZ export prices are about recover
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• Global dairy prices likely to remain weak over medium term
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• Auckland house prices rapidly increasing, more supply needed
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• Tradables inflation will increase noticeably as fuel prices rise
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• Decent and continued fall in NZD will also boost tradables inflation
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The NZD has been smashed lower in immediate response. The NZDUSD has plunged 180 points straight away.
The next OCR decision will be held on 30th July.

Below is link to the full RBNZ statement:

http://www.rbnz.govt.nz/news/2015/official-cash-rate-reduced-to-3.25-percent.html

Current indicative levels are:

NZD-USD 0.7040 / 0.7065
NZD-AUD 0.9090 / 0.9115
NZD-EUR 0.6215 / 0.6240
NZD-GBP 0.4535 / 0.4560
NZD-JPY 86.45 / 86.70

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