23 Jul 2015
Expect further rate cuts by RBNZ – Westpac
FXStreet (Edinburgh) - Strategist Sean Callow at Westpac sees the likeliness of the RBNZ lowering rates to 2% in the upcoming months.
Key Quotes
“The RBNZ softened its rhetoric on the exchange rate. It moved away from the key words “unjustified and unsustainable”, instead opting to say “further depreciation is necessary.”
“The policy bias was also not especially dogmatic and overall the statement gave the impression that there was no consideration of moving things along with a 50bp cut at this meeting”.
“Westpac continues to expect rates to be lowered to 2.0% but now expects only 25bp increments throughout the easing cycle”.
“This - and our ongoing view that the Fed will hike in Sep (only 40% priced) – should ensure that NZD/USD heads towards 0.62 by end-2015”.
“But for the week ahead, the kiwi short-covering should continue, providing a reprieve for an otherwise gloomy outlook for the commodity bloc”.
Key Quotes
“The RBNZ softened its rhetoric on the exchange rate. It moved away from the key words “unjustified and unsustainable”, instead opting to say “further depreciation is necessary.”
“The policy bias was also not especially dogmatic and overall the statement gave the impression that there was no consideration of moving things along with a 50bp cut at this meeting”.
“Westpac continues to expect rates to be lowered to 2.0% but now expects only 25bp increments throughout the easing cycle”.
“This - and our ongoing view that the Fed will hike in Sep (only 40% priced) – should ensure that NZD/USD heads towards 0.62 by end-2015”.
“But for the week ahead, the kiwi short-covering should continue, providing a reprieve for an otherwise gloomy outlook for the commodity bloc”.