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German Ifo business climate index falls sharply in November, economic growth likely to shrink in Q3

U.S. Consumer Confidence falls in September

U.S. durable goods orders sustain robust growth

U.S. weekly jobless claims unexpectedly decrease

Swedish economic sentiment indicator rises in November

Best Gold Stocks to Buy Now: AABB, GOLD, GDX

Germany's unemployment exceeds expectations in September

U.S. existing home sales decline in August

U.S. Q3 economic growth unrevised in second estimate

Taiwanese money supply continues to see strong growth, CBC likely to keep rates on hold in December

U.K.’s flash PMI indices indicate decline in business activity in November, composite index falls to 47.4

U.S. vehicle sales fall again in November

U.S. existing home sales rise above expectations in October

Swiss franc likely to gradually depreciate against euro in coming months

Bank Indonesia keeps key interest rate on hold at 3.75 pct

Bank of Korea likely to keep key interest rate on hold at 0.50 pct in November

Canada's economy shows growth in July, but growth stalled in

RBNZ cut OCR and signalled more to come

Thursday, July 23, 2015 3:19 AM UTC

Reserve Bank of NZ reduced the OCR by 25 bps, and indicated that further OCR reductions were coming.

RBNZ stated that,

  • "At this point some further easing seems likely."
  • "Growth outlook is now softer than at the time of the June Statement. Rebuild activity in Canterbury appears to have peaked, and the world price for New Zealand's dairy exports has fallen sharply." 
  • "House prices in Auckland continue to increase rapidly, but, outside Auckland, house price inflation generally remains low." 
  • "Further depreciation is necessary given the weakness in export commodity prices,"

These comments indicate that the RBNZ has become more pessimistic on the economic outlook. But offsetting these downbeat comments, the RBNZ pointed out that the plunging exchange rate will cause inflation to rise back to 2% in early-2016. In a separate paragraph the RBNZ described the falling exchange rate as helpful. 

Furthermore, the RBNZ's policy guidance was probably a tad more moderate than markets anticipated. Consequently, two-year swap rates rose around five basis points after the announcement.

With underlying inflation continuing to prove very soft, global dairy prices plunging, the Canterbury rebuild peaking early, and business confidence falling, we believe the RBNZ has its work cut out to return inflation to two percent, beyond a short-term exchange-rate induced inflation spike next year. 

According to Westpac 
  • The RBNZ will cut the OCR again in September
  • The OCR is expected to fall to a record low of 2.0%.
  • 25 basis point OCR cuts ae expected at each RBNZ meeting between now and next January.

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