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4 Feb 2015
RBNZ Governor opens up possibility of easing – TDS
FXStreet (Barcelona) - The Research Team at TD Securities reviews the data releases out of NZ, and further cites RBNZ Governor’s comments highlighting the possibility of further easing if certain conditions are met.
Key Quotes
“The RBNZ Governor delivered a prepared speech in Christchurch that offered something for everyone. In it the Governor opened up the possibility of easing stating “With a sizeable positive supply side shock, such as a major fall in the price of oil, a cut in interest rates can be appropriate if there is sufficient capacity to accommodate additional demand”."
“But …. “However, in our current situation there are important considerations why a period of OCR stability is the most prudent option”."
“As for rate cuts, he broached the topic, but such a move appears highly unlikely when he stated “Similarly, before any decision to raise interest rates, we would need to be confident that capacity utilisation and labour market pressures were generating, or about to generate, a substantial increase in inflation”.”
“Dec qtr employment rose by +1.2%/qtr in Dec qtr 2014 (mkt +0.8%) with full-time (+1.0%) and part-time (+2.9%) contributing this time. The unemployment rate jumped from 5.4% to 5.7% due to a fresh record high in the participation rate to 69.7%."
“Record net migration is so far boosting participation and employment without boosting wages, which is supportive for low inflation.”
“Overnight, GDT dairy prices jumped by +9.4%, led by a +19.2% jump in whole milk powder prices, due to lower volumes as already foreshadowed by Fonterra. So far, dairy prices in aggregate are +11% for Q1. Good start, but still over 40% below levels of a year ago.”
Key Quotes
“The RBNZ Governor delivered a prepared speech in Christchurch that offered something for everyone. In it the Governor opened up the possibility of easing stating “With a sizeable positive supply side shock, such as a major fall in the price of oil, a cut in interest rates can be appropriate if there is sufficient capacity to accommodate additional demand”."
“But …. “However, in our current situation there are important considerations why a period of OCR stability is the most prudent option”."
“As for rate cuts, he broached the topic, but such a move appears highly unlikely when he stated “Similarly, before any decision to raise interest rates, we would need to be confident that capacity utilisation and labour market pressures were generating, or about to generate, a substantial increase in inflation”.”
“Dec qtr employment rose by +1.2%/qtr in Dec qtr 2014 (mkt +0.8%) with full-time (+1.0%) and part-time (+2.9%) contributing this time. The unemployment rate jumped from 5.4% to 5.7% due to a fresh record high in the participation rate to 69.7%."
“Record net migration is so far boosting participation and employment without boosting wages, which is supportive for low inflation.”
“Overnight, GDT dairy prices jumped by +9.4%, led by a +19.2% jump in whole milk powder prices, due to lower volumes as already foreshadowed by Fonterra. So far, dairy prices in aggregate are +11% for Q1. Good start, but still over 40% below levels of a year ago.”