Response to the RBNZ rate decision earlier today
here. It was acting governor Grant Spencer’s last meeting, where he will be replaced by Adrian Orr next week.
Anyway, Nomura says that with little change in the NZD after the meeting it presents Orr with “complete flexibility” in terms of policy decisions. They add that they expect two rate hikes by the central bank to come in 2H 2019.
However, they say that “given that the incoming governor is something of an “unknown quantity”, potential changes to the Policy Target Agreement and the review of the Reserve Bank Act, uncertainty is higher than usual and we will continue to monitor developments closely over the coming month”.
Well, even though Orr is set to come in and there are uncertainties surrounding his mandate, I doubt it will change all too much from before. But indeed we will have to wait for the PTA and find out what exactly his mandate will be, before being able to decipher how close the RBNZ is in terms of normalising monetary policy.