RBNZ Governor Wheeler Speech

RBNZ Governor Wheeler Speech titled "The Global Economy, NZ Economic Outlook, & Policy Target Agreements"

The Reserve Bank Governor Graeme Wheeler has just delivered a speech titled“The Global Economy, NZ Economic Outlook, & the Policy Target Agreement” to the Canterbury Employers’ Chamber of Commerce.

His key points were:

• Most risks facing the economy are on the downside
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• Will take longer for headline inflation to reach target
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• RBNZ will avoid a mechanistic response to low inflation
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• In appropriate to cut rate in response to low inflation
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• More to setting monetary policy than headline inflation
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• Future easing may be required if concerns deepen about global economy
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• Some further NZD depreciation is desirable
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• Monetary policy will continue to be accommodative
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• Don’t expect price expectations to drop significantly
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• Doesn’t want inflation expectations to become unstable, decline
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NZD is a little higher in immediate response.

Quick summary: NZ interest rates will not be cut in response to falling oil, but they will if the global economy worsens, and the RBNZ would like the NZD lower.

Here’s the link to the full RBNZ press release on the speech:

http://www.rbnz.govt.nz/news/2016/canterbury-speech-on-pta.html

Current indicative levels are:
NZD-USD 0.6525 / 0.6550
NZD-AUD 0.9290 / 0.9915
NZD-EUR 0.5975 / 0.6000
NZD-GBP 0.4530 / 0.4555
NZD-JPY 78.25. / 78.50

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