New Zealand cuts rates 50 bps, kiwi tumbles as markets bet on more aggressive easing
RBNZ's outsized cut prompts bets for another 50 bp cut in Nov
RBNZ says inflation is within 1%-3% target, sees subdued economy
New Zealand dollar slips, swaps fall on dovish policy stance
Adds Citi forecasting 75bps cut in Nov, updates NZ dlr and swap rates
By Lucy Craymer
WELLINGTON, Oct 9 (Reuters) -New Zealand's central bank slashed rates by 50 basis points on Wednesday and said policy is still restrictive even though inflation has returned to target, prompting markets to bet on yet more aggressive easing and sending the kiwi dollar skidding.
The decision to reduce the cash rate to 4.75% was in line with market pricing and most economists' expectations, with 17 of 28 economists in a Reuters poll having forecast the Reserve Bank of New Zealand (RBNZ) to cut the benchmark rate by half a percentage point.
“The Committee agreed that it is appropriate to cut the OCR (official cash rate) by 50 basis points to achieve and maintain low and stable inflation, while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate," the central bank said in its policy statement.
The kiwi dollar NZD=D3 tumbled 0.9% to $0.6084, the lowest since August 19, while two-year swap rates NZDSM3NB2Y= declined 7 basis points to 3.605% after the decision. Swaps imply there is further 45 basis points of easing to come at the RBNZ's November meeting.
"Overall, the October meeting reinforces the bank's dovish stance and indicates no clear signs of slowing in November. With inflation within target and the labour market fragile, the RBNZ will ease rates more swiftly," said Shannon Nicoll, associate economist at Moody’s Analytics.
Minutes from the RBNZ committee said it assessed that annual inflation has returned to within its 1% to 3% target range in the third quarter, and is converging on the 2% midpoint.
New Zealand's annual inflation has come off in the past few months, and the most recent data showed it was at 3.3% in the second quarter.
"Members agreed that an OCR of 4.75% is still restrictive and leaves monetary policy well-placed to deal with any near-term surprises," the minutes added.
This is the second consecutive meeting in which the central bank has cut the official cash rate after starting its easing cycle in August with a 25-basis-point reduction.
“The New Zealand economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy. Lower import prices have assisted the disinflation,” the RBNZ statement said.
ANZ chief economist Sharon Zollner said that while the next move remains conditional on data, "there was nothing in today’s commentary to dissuade the market from continuing to price a follow-up 50bp cut in November as the likeliest outcome."
Citi economists are now forecasting an even bigger 75 bps cut next month, from 50 bps previously, saying they see little need for the cash rate to be "so restrictive" given the large policy-review gap between November and February next year.
WEAKENED ECONOMY
The central bank said the economy, which contracted in the second quarter, was expected to remain subdued over the near term with weak house price growth and lower levels of net immigration crimping overall demand.
The committee also warned about spillover effects from the escalating Middle East conflict, saying it could pose significant risks to both global economic activity and energy prices. Furthermore, it noted that economic growth in the United States and China is expected to slow.
Confidence improved slightly after the central bank’s rate cut in August when it also forecast the cash rate to move down to 3.85% by end-2025, underlining broad market consensus for more stimulus to shore up the economy.
New Zealand’s rate cuts align with similar moves by many central banks globally as policymakers rollback their aggressive inflation-busting tightening campaigns. The Federal Reserve slashed rates by an outsized 50 basis points at its last meeting in September.
New Zealand's neighbour Australia remains an outlier to the easing trend as policymakers there say restrictive conditions must remain in place for a while longer to bring inflation to heel.
ASB Bank said the RBNZ's decision underlined that rates were still well above neutral settings.
"Cutting by 50bp more than once would make the RBNZ a bit of a central bank maverick," ASB chief economist Nick Tuffley said.
"But it is a reflection that the OCR, even at 4.75%, is still some way above neutral settings that we place in a 3-4% range."
Reporting by Lucy Craymer in Wellington and Stella Qiu in Sydney
Editing by Shri Navaratnam
الأصول ذات الصلة
آخر الأخبار
إخلاء المسؤولية: تتيح كيانات XM Group خدمة تنفيذية فقط والدخول إلى منصة تداولنا عبر الإنترنت، مما يسمح للشخص بمشاهدة و/أو استخدام المحتوى المتاح على موقع الويب أو عن طريقه، وهذا المحتوى لا يراد به التغيير أو التوسع عن ذلك. يخضع هذا الدخول والاستخدام دائماً لما يلي: (1) الشروط والأحكام؛ (2) تحذيرات المخاطر؛ (3) إخلاء المسؤولية الكامل. لذلك يُقدم هذا المحتوى على أنه ليس أكثر من معلومات عامة. تحديداً، يرجى الانتباه إلى أن المحتوى المتاح على منصة تداولنا عبر الإنترنت ليس طلباً أو عرضاً لدخول أي معاملات في الأسواق المالية. التداول في أي سوق مالي به مخاطرة عالية برأس مالك.
جميع المواد المنشورة على منصة تداولنا مخصصة للأغراض التعليمية/المعلوماتية فقط ولا تحتوي - ولا ينبغي اعتبار أنها تحتوي - على نصائح أو توصيات مالية أو ضريبية أو تجارية، أو سجلاً لأسعار تداولنا، أو عرضاً أو طلباً لأي معاملة في أي صكوك مالية أو عروض ترويجية مالية لا داعي لها.
أي محتوى تابع للغير بالإضافة إلى المحتوى الذي أعدته XM، مثل الآراء، والأخبار، والأبحاث، والتحليلات والأسعار وغيرها من المعلومات أو روابط مواقع تابعة للغير وواردة في هذا الموقع تُقدم لك "كما هي"، كتعليق عام على السوق ولا تعتبر نصيحة استثمارية. يجب ألا يُفسر أي محتوى على أنه بحث استثماري، وأن تلاحظ وتقبل أن المحتوى غير مُعدٍ وفقاً للمتطلبات القانونية المصممة لتعزيز استقلالية البحث الاستثماري، وبالتالي، فهو بمثابة تواصل تسويقي بموجب القوانين واللوائح ذات الصلة. فضلاً تأكد من أنك قد قرأت وفهمت الإخطار بالبحوث الاستثمارية غير المستقلة والتحذير من مخاطر المعلومات السابقة، والذي يمكنك الاطلاع عليه هنا.
