More from the RBNZ: price indices signal a continued decline in consumer price inflation

The Reserve Bank of New Zealand cut its cash rate by half a percent, headlines here:

• RBNZ cuts cash rate by 50bp, as widely expected

From the minutes to the RBNZ meeting:

• The committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.
• The committee agreed that excess capacity has dampened inflation expectations, and price and wage changes are now more consistent with a low-inflation environment.
• Members agreed that an OCR of 4.75 percent is still restrictive and leaves monetary policy well-placed to deal with any near-term surprises.
• New Zealand’s annual consumer price inflation is assessed to currently be within the committee’s 1 to 3 percent target band and is expected to converge to the target midpoint.
• The committee discussed the respective benefits of a 25-basis point versus a 50-basis point cut in the OCR.
• The committee agreed that domestic activity is weak.
• They agreed that a 50-basis point cut at this time is most consistent with the committee’s mandate of maintaining low and stable inflation.
• The committee agreed that the economic environment provided scope to further ease the level of monetary policy restrictiveness.
• High-frequency indicators point to continued subdued growth in the near term.
• Labour market conditions are expected to ease further.
• The committee agreed that monthly price indices signal a continued decline in consumer price inflation in New Zealand.
• Financial conditions remain restrictive, and credit demand remains subdued.

NZD/USD lower:

This article was written by Eamonn Sheridan at www.forexlive.com.