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RBNZ Govenor remains neutral in first address.

Written by Sam Coxhead on October 26th, 2012.      0 comments

10.00 AM (NZT) New RBNZ Governor Wheeler made his first address in his new role this morning. In a speech titled “Central banking in a post-crisis world”, he made a balanced assessment of where things at for New Zealand monetary policy. He said that with 2% growth, New Zealand did not require the unorthodox measures employed by other central banks around the world. But it could cuts rates if needed. This comes after yesterday’s statement accompanying his unchanged cash rate, as he said that it is likely that the Christchurch rebuild and the activity in the Auckland housing market would proceed as expected.
He also pointed out that price stability will boost growth and is objective. He touched on the topic of the high dollar and intervention. Whilst he did not rule intervention out , he stated it has only short term impact and the RBNZ would only do it if all of its prerequisite conditions were met.
All in all it was a balanced first speech, and offered a reliably neutral outlook on monetary policy.
The NZ dollar has come under pressure following the announcement in what appears to be another knee jerk reaction of sorts. Demand was boosted following yesterday’s statement and the absence of the hint that the cash rate would be lowered. The price action looks like a market low on liquidity, where moves are accentuated. Its seems likely the RBNZ will leave its cash rate at 2.50% far into 2013, and beyond, assuming that the progress in Europe and the stabilization of wider Asian growth continues, albeit at a slow pace.
Also hampering demand for both the AUD and NZD late in the US session  today are disappointing earnings results from both Apple and Amazon This will likely set the tone for the remainder of the week. Apple revenues are seen at 53b USD vs est. 55b USD, and earnings per share at $11.75 vs est.$15.49.
Currency pair Current level Pre-RBNZ Speech Percentage change 24 hour range
NZDUSD 0.8164 0.8213 -0.60% 0.8135 0.8243
AUDUSD 1.0337 1.0359 -0.21% 1.0330 1.0397
NZDAUD 0.7900 0.793 -0.38% 0.7871 0.7940
AUDNZD 1.2658 1.2610 0.38% 1.2594 1.2705
NZDGBP 0.5064 0.5091 -0.53% 0.5077 0.5132
NZDEUR 0.6312 0.6344 -0.50% 0.6279 0.6350
NZDJPY 65.52 65.95 -0.65% 65.22 66.18
NZDCAD 0.8124 0.8163 -0.48% 0.8094 0.8170