RBNZ will exercise patience on the policy front - Nomura

Analysts at Nomura point out that the RBNZ this week announced an unchanged cash rate, at 1.75%, as was uniformly expected and also repeated its open-ended conclusion that policy will remain unchanged for a “considerable period”, with “numerous uncertainties” meaning that “policy may need to adjust accordingly”.

Key Quotes

“Its updated forecasts – which now incorporate a preliminary assessment of the impact of new government policies in several areas – show a slightly weaker GDP profile but a higher inflation path over the next 18 months, with lower trade-weighted index forecasts, and the official cash rate estimated to rise a fraction in Q2 of 2019, from Q3 previously. We continue to think the RBNZ (like the RBA) will exercise patience on the policy front, and we continue to forecast an RBNZ rate hike in early 2019.”