As was widely expected (and priced) the RBNZ hiked their OCR 25bps to 50bps at their 6 October meeting. They indicated that there’s more tightening to come, noting rising capacity pressures and the need to reduce monetary policy stimulus to maintain price stability. The Committee agreed that rising capacity pressures would feed through into inflation. … Read more
The RBA is growing more confident about the rebound from Delta. They also tipped that the focus of macro-pru will be loan serviceability buffers.
The roadmap out of lockdown has been released, so the RBNZ seems almost certain to hike 25bps to 50bps on 6 Oct. Looking further forward, the case for tight monetary policy can be made. The level of GDP and CPI were above the Feb’20 MPS forecasts in Q2’21, and the easing from the FLP and prior QE, means an OCR above 2% may be needed.
Gov Lowe’s speech, Delta, the Economy, and Monetary Policy, was in many ways a watershed speech. Lowe jettisoned the blurry two-point-something inflation language in favour of a firm commitment to get inflation back to the middle of the target range and distanced himself from the financial stability argument for raising rates, by saying explicitly that … Read more