No surprises in Reserve Bank’s OCR decision
However, economists have offered up slightly differing interpretations of Reserve Bank Governor Graeme Wheeler’s comments on cutting the OCR.
Wheeler said it would be appropriate to lower the OCR if demand weakens, and wage and price-setting outcomes settle at levels lower than is consistent with the inflation target.
ASB chief economist Nick Tuffley said the RBNZ’s statement was a bit more explicit that it has adopted an easing bias – as indicated in Assistant Governor John McDermott’s speech last week.
“We think that the odds of a rate cut this year have increased to about a 50/50 chance. We don’t explicitly think there will be a cut, but it is finely balanced in terms of inflation issues. The RBNZ is clearly nervous about traded inflation.”
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