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Lee Sue Ann, Economist at UOB Group, assessed the recent decision on rates by the RBNZ.

Key Quotes

“The Reserve Bank of New Zealand (RBNZ) held its official cash rate (OCR) unchanged at 1.00%. In its accompanying press release, the RBNZ begun by saying that “new information since the August Monetary Policy Statement did not warrant a significant change to the monetary policy outlook”.

“The RBNZ’s decision to stay pat at this meeting was not surprising given the bigger-thanexpected move back in August, which we deemed as pre-emptive in nature. That said, the RBNZ is clearly on an easing bias, and expects interest rates to remain “low for longer” to help support the Kiwi economy”.

“New Zealand’s economy grew at the slowest pace in more than five years in 2Q19″¦ The RBNZ noted”¦ that global trade and other political tensions remained elevated, concluding that “there remains scope for more fiscal and monetary stimulus, if necessary, to support the economy” in order to maintain its inflation and employment objectives”.

“The next RBNZ monetary policy decision, along with a full Monetary Policy Statement (MPS), will be on 13 November. For now, we are keeping our year-end OCR forecast unchanged at 1.00%. That said, we note that the RBNZ will be very sensitive to any early signs of downside risks materializing. Hence, we will be closely monitoring domestic data, as well as global developments, which will have important implications on the timing and extent of further monetary policy easing”.