The RBNZ cut the official cash rate by 50 basis points to 2.5%. This wasn’t to surprising. However, the statement was a hell of a lot more dovish than I expected, especially:
We expect to keep the OCR at or below the current level through until the latter part of 2010.
So the RBNZ is stating that it will leave the OCR at or below 2.5% until LATE-2010. That is a commitment to expansionary policy for quite sometime. In that case, the RBNZ’s outlook for economic activity must have deteriorated substantially for late 2009 and 2010.
6 comments
Eric Crampton says:
April 30, 2009 at 10:28 am (UTC 12 )
I have to stop trading iPredict OCR stocks on what I’d do instead of what Bollard’s likely to do….
Matt Nolan says:
April 30, 2009 at 10:28 am (UTC 12 )
@Eric Crampton
Amen to that
goonix says:
April 30, 2009 at 10:42 am (UTC 12 )
lol! I think a few people would have been burnt this morning.
Miguel Sanchez says:
April 30, 2009 at 3:02 pm (UTC 12 )
Let it be known that I called this one:
http://www.tvhe.co.nz/2009/04/02/why-does-the-rbnz-want-to-stop-long-rates-going-up/#comment-18674
Matt Nolan says:
April 30, 2009 at 3:04 pm (UTC 12 )
@goonix
50 was pretty dominate for a while on ipredict
Matt Nolan says:
April 30, 2009 at 3:04 pm (UTC 12 )
@Miguel Sanchez
Hi Miguel,
There interest rate track still sounds endogenous from the statement – it just sounds like they have revised down growth for an additional 9-12 months, which would imply that the endogenous OCR should be below 2.5%