Kiwi Article IV – scope for RBNZ to ease

Looking through old IMF article IV consults, I re-read the concluding statement from their Kiwi mission (April 2012).

It names four key external risks:

1/ Lower export demand (check, both Australia and China have under-shot)
2/ Worsened terms of trade (check, the milk price has been mooving)
3/ Increased cost of external funding (yep … See CDS)
4/ Roll-over risk in wholesale funding markets (not yet an issue)

And the first line of defence is a rate cut:

The authorities have policy space to respond to near-term shocks, with monetary policy serving as the first line of defense. The RBNZ has the scope to lower interest rates and loosen monetary conditions to help buffer against a downside scenario

This entry was posted in Uncategorized. Bookmark the permalink.

1 Response to Kiwi Article IV – scope for RBNZ to ease

  1. On your Marx says:

    I doubt that anyone would disagree as there is no freezing of the credit markets at present. In other words monetary policy can do its job

    NZ does show what happens if you wait too long to use fiscal stimulus (as does Canada) when it is needed.

please comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.