RBNZ OCR to further fall to 2.0% by December

Jul 21, 2015 04:03 am UTC| Commentary

The plunging exchange rate is the one development that genuinely does argue against interest rate cuts. However, the exchange rate has not fallen far enough the RBNZ still has a lot of work to do to return inflation to two...

Japan's wealth transfers from corporates to households

Jul 21, 2015 03:40 am UTC| Commentary

As net domestic fund demand had been about zero (0%) for a long time in Japan, corporates were steadily deleveraging, leading to an abnormally high corporate savings rate. As a result, wealth was transferred from...

Aussie dips as RBA minutes put forward necessary and likely depreciation in exchange rate

Jul 21, 2015 03:37 am UTC| Commentary

AUDUSD is currently trading around 0.7361 levels and well supported below 0.7400 levels The Australian dollar eased on Tuesday as minutes from the RBAs July 7 meeting reiterated the banks stance that depreciation in the...

Arguments for/against an immediate RBNZ 50bps cut

Jul 21, 2015 03:36 am UTC| Commentary

The arguments for an immediate 50bps cut are: Why wait? Virtually everybody agrees that the OCR needs to fall by another 75 basis points, and some are saying 125. 50bps now is unlikely to be a policy mistake. This...

RBNZ to cut 50 basis points in Thursday meeting

Jul 21, 2015 03:32 am UTC| Commentary

An OCR review along these lines would cause markets to price some risk of a 50bps OCR cut in September, and to price a risk of the OCR eventually falling below 2.5%. These market changes would manifest as a drop in the...

Rising energy costs to weigh on Japan households

Jul 21, 2015 03:29 am UTC| Commentary

Significant changes can be seen in the direction of Japans wealth transfers. They have shifted from "households to corporates" which generated sluggish domestic demand to "corporates to households" which leads to domestic...

Improved terms of trade likely to recover the Japan household savings rate now

Jul 21, 2015 03:26 am UTC| Commentary

As Japan terms of trade improved, the burden on households has eased. As a result, household fundamentals have already recovered.At present, due to the improvements in terms of trade stemming from the fall in oil prices,...