PREVIOUS TRADING DAY EVENTS 04 Oct 2023

New Zealands central bank decided to hold rates unchanged, with OCR at 5.5, as reported on Wednesday with policymakers considering that rate hikes so far are sufficient to fight inflation.

The Reserve Bank of New Zealand RBNZ suggested though that further increases are still in play.

Interest rates are constraining economic activity and reducing inflationary pressure as required, the central bank said in a statement.

We see this statement as more dovish than our expectations, said Westpac NZ chief economist Kelly Eckhold. We anticipated the RBNZ would craft a statement that broadly endorsed current market pricing for around a 5050 chance of a 25 bp rate rise in November. This statement suggests that view was too hawkish.

It was stated that interest rates will need to remain at a restrictive level for the foreseeable future to ensure consumer price inflation returns to its 1 to 3 target range. New Zealands annual inflation is currently running at 6.0, just below a threedecade high of 7.3 June 2022 with expectations that it will return to its target band within the next two years.

The Bank appears content to wait for restrictive policy settings to fully feed through to the real economy, analysts at Capital Economics in a note.

Source

httpswww.reuters.commarketsnzcentralbankholdsratessteadysayspasthikestemperinginflation20231004

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