The Ready Reckoner, which quantifies the impact that recent data will have on the RBNZ’s model, quantified in terms of changes to the model’s Official Cash Rate forecast, was released by analysts at Westpac Banking Corporation.
Key Quotes:
“The Ready Reckoner is meant to be a pure read on the balance of recent data, and is not a prediction of the RBNZ’s actions. At present, the RBNZ appears to be in a state of flux, adjusting to the new dual mandate and to the new Governor’s views. Consequently the Ready Reckoner, with its pure read on the data, may be not be the best guide as to how the RBNZ’s tone will evolve. Still, the Ready Reckoner is useful for tracking what recent data will mean to the RBNZ.
Near-term inflation: +5bp
September quarter inflation is now forecast at 0.7%, compared to the RBNZ’s forecast in the August MPS of 0.4%. However, the difference is down to rising petrol prices, which have less impact on the Ready Reckoner.
GDP: +15bp
June quarter GDP was 1.0%, compared to the RBNZ’s forecast of 0.5%.
Exchange rate: +5bp
The TWI has consistently been trading about 1% lower than the RBNZ’s August MPS forecast. We assume that about half of this will be treated as a portfolio shock by the RBNZ, and about half will be assumed due to NZ factors (the latter half has no impact on the Ready Reckoner).
Export prices: -10bp
Dairy auction prices have fallen well below the RBNZ’s assumed level of around $3000 per tonne.
Fixed mortgage rates: +5bp
Average advertised fixed mortgage rates have fallen by amounts that vary across the yield curve – 7 basis points for six months, up to 40 basis points for four and five years.
Total change: +20bp”
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