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Today the RBNZ cut the OCR 75bps to 0.25% in an out-of-cycle move, an unprecedented step. Immediate and sizeable action was needed, in the opinion of economists at ANZ Research who analyzes the implications for the kiwi.

Key quotes

“RBNZ delivered an emergency 75bp cut this morning, taking the OCR to 0.25% ‘for at least the next 12 months’.”

“For the NZD this is arguably slightly good news, as it takes the RBNZ off the side-lines to firmly midfield, with strong support provided by fiscal policy.” 

“We would expect QE to result in some NZD selling as offshore sellers surrender bonds to the RBNZ – but that’s a story for down the track.” 

“We also note the RBNZ opined that ‘the New Zealand dollar exchange rate has also depreciated against our trading partners acting as a partial buffer for export earnings’. That’s code for ‘don’t expect us to stand in the way of NZD weakness’.”

“We expect the NZD to be under mild downward pressure as opposed to collapsing.”


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