RBNZ Refrains from Action – MUFG
Derek Halpenny, European Head of GMR at MUFG, suggests that prior to the
surprise decision by the BOJ, the RBNZ also surprised the markets by
“Given the RBNZ has been quite explicit about the threat from deflation expectations were high that action might be taken. The RBNZ did leave open the likelihood of additional easing at the next meeting on 8th June.
Certainly the RBNZ will continue to emphasise opposition to the strength of the New Zealand dollar – Governor Wheeler stated today that a lower New Zealand dollar was “desirable to boost tradables inflation and assist the tradable sector”. We see limited upside for NZD/USD from here and expect continued concerns over too low inflation to fuel expectations of additional easing by the RBNZ.”