NZD largely unphased by the RBNZ comments – BBH

Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway reiterated the bank’s policy outlook , BBH's FX analysts report.

Weakness in NZD has already helped boost exports

"NZD was largely unphased by the comments. Conway highlighted that the RBNZ’s updated Official Cash Rate (OCR) forecast implied another 75bps of easing over the next year while stressing that taking the OCR below neutral (around 3%) is 'not our central projection"."

"Conway added that 'the lower kiwi dollar is part of the reason we’re predicting growth to return over 2025 or from the end of 2024.' In fact, past weakness in NZD has already helped boost exports and shrink New Zealand’s merchandise trade deficit. The annual trade deficit narrowed to more than a three-year low at -NZ$7.2bn in January vs. -NZ$7.8bn in December."