Very dovish statement causes a huge decline of the NZD. Here are the most important headlines taken from the document:
- The outlook has been revised down due mainly to weaker activity in the developing economies.
- Financial markets remain uncertain as to the timing and impact of an expected tightening in US monetary policy.
- The economy is now growing at an annual rate of around 2 percent.
- Further depreciation is appropriate, given the sharpness of the decline in New Zealand’s export commodity prices
- Headline inflation is expected to return well within the target range by early 2016.
- A reduction in the OCR is warranted by the softening in the economy and the need to keep future average CPI inflation near the 2 percent target midpoint
- At this stage, some further easing in the OCR seems likely. This will depend on the emerging flow of economic data.
Further depreciation is likely, further easing is likely, the outlook has been revised down…Knock-out. Bad news for the NZ dollar.