Latest news with #MonetaryPolicyStatement
Business Standard
21 hours ago
- Business
- Business Standard
RBI reduces penal interest rates on shortfalls in CRR and SLR requirements
The Reserve Bank of India reduced penal interest rates on shortfalls in the cash-reserve-ratio and statutory-liquidity-ratio requirements with immediate effect on Friday. As announced in the Monetary Policy Statement 2025-26 dated June 06, 2025, the Bank Rate is revised downwards by 50 basis points from 6.25 per cent to 5.75 per cent with immediate effect, the central bank said. Thus, accordingly, all penal interest rates on shortfall in CRR and SLR requirements, which are specifically linked to the Bank Rate, also stand revised. For shortfalls in reserve requirements, the penal rate of the bank rate plus 3 percentage points has been reduced from 9.25% to 8.75%. The higher penal rate of bank rate plus 5 percentage points has been cut from 11.25% to 10.75%, according to a release by the central bank.
Scoop
5 days ago
- Business
- Scoop
May Is Over, The Mayhem Is Not, And Markets Are Muddled
Press Release – Kiwi Economics Tariff volatility continues to dominate financial markets. The RBNZs latest statement alone mentioned the word uncertain, or some or a form of it, 164 times across their 60 or so page statement. Tariff volatility continues to dominate markets and the outlook. We're far from any resolution. And the fragility of the global economy poses significant risk to our recovery here at home. Aware of all the risks, the RBNZ cut the cash rate to 3.25% last week. And despite the uncertain path ahead, there's more cuts coming. That's the key takeaway from the May MPS. Our COTW takes a look at the curious sell off in Kiwi rates following the RBNZ policy decision. Here's our take on current events After a hectic month marked by a whirlwind of trade escalations and de-escalations, the Government's budget release, and last week's RBNZ Monetary Policy Statement, May has officially come to a close. The mayhem, however, is far from over. Tariff volatility continues to dominate financial markets. Whether it's the ongoing legal battle between the Trump administration and the courts over the legality of the 'Liberation Day' tariffs, or the renewed tensions between the US and China – with each side accusing the other of violating their trade truce – or the proverbial (not literal!) shots aimed at the European Union, the economic landscape remains incredibly fragile. There's a lot of noise right now. And it's hard for everyone, including policymakers, to make sense of it all. The RBNZ's latest statement alone mentioned the word uncertain, or some or a form of it, 164 times across their 60 or so page statement. That's about 3 mentions a page… Nevertheless, the RBNZ delivered on expectations and delivered another 25bps cut. The cash rate sits at 3.25%. And there's more cuts coming. That's the key takeaway from the May MPS. Although the path from here is highly uncertain. The OCR track was lowered from a flat lined bottom of 3.10% to a 2.85% trough in March 2026. So now another 25bps cut to 3% is fully baked into the cake. And from there, there's a 60% chance of another 25bps cut to 2.75%. Once again, we would love to have seen a bit more. We're still of the view that a 2.5% cash rate is what the Kiwi economy needs. And an OCR track bottoming anywhere below 2.75% would have signalled what we had hoped to see. But with each MPS, the terminal OCR has moved closer to our 2.5% view. Give them time, and they just might get there. But for now, such heightened uncertainty is making it harder for all policymakers to navigate. So, it's not surprising to see the committee err on the side of caution. The fact the RBNZ 'voted' 5-1, with one member opting for a pause to assess, throws some doubt on the timing of the next move, but not the direction. They are not on a 'pre-set course', and always data dependent. We think there's enough for them to cut again in July, but they may wait until August to cut again. It depends… on what? Everything. All in all, we think there was a bit in the May MPS for everyone, dove or hawk. The RBNZ's forecasts were markedly revised lower. The expected Kiwi economic recovery is forecast to be slower than projected in the February MPS with the RBNZ now forecasting 0.7% growth this year, down from 1%. And greater spare capacity than previously modelled also sees unemployment stay higher for longer. You can't ignore that. And that's the dovish part. The hawkish part lies in the dissenting 5-1 vote and the accompanying hawkish tone in post MPS media conferences. Comments from Hawkesby including the statement that the Committee will have 'no clear bias' heading into the July meeting, injected a dose of uncertainty. And together, these seeds of doubt gave markets something to run with. Rates, particularly in the short end saw a sizeable jolt higher (see our COTW for move on the move in markets). But we think markets, as they so often do, have gotten a bit carried away. Time will tell. Charts of the Week: A less dovish, highly uncertain, RBNZ bias generated a mixed reaction in markets. If you just read the statement, the RBNZ's easing bias was strengthened. The economic forecasts were cut, and another 25bp rate cut was inserted into the OCR track (from a low of 3.1% to 2.85%). The track shows a clear bias to cut to at least 3% and there's a 60% chance of a cut to 2.75%. That's dovish. Because they're still cutting. Our first chart shows with each MPS over the last year, the terminal OCR has moved closer to our 2.5% view. Give them time, and they just might get there. The FX market read the statement. The Kiwi currency barely moved. The Kiwi currency reacted exactly as you'd expect. It fell. It rose. And then it fell again. It looked like a heart rate monitor around .5950. There wasn't much change at all. There are bigger issues offshore for currency traders to grapple with. If you listened to the press conference, the RBNZ's top brass were crystal clear in their clouded uncertainty. Heightened uncertainty is making it harder for all policymakers to navigate. So, it's not surprising to see the committee err on the side of caution. The fact the RBNZ 'voted' 5-1, with one member voting for a pause to assess, throws some doubt on the timing of the next move, but not the direction. They are not on a 'pre-set course', and always data dependent. We think there's enough for them to cut again in July, but they may wait until August to cut again. It depends… on what? Everything. It was the 'vote', the first time in two years, that got interest rate traders (re)thinking. That seed of doubt caused a bit of a jolt, especially short end interest rates. The pivotal 2-year swap rate rose 10bps, from 3.16% to 3.26% (now 3.32%), as the implied terminal cash rate lifted from 2.85% to 2.95% (now 3%). See the second chart. It's not a big move… but it was one Governor Christian Hawkesby pushed back on. The telling comment from Hawkesby, when asked about the market reaction, was his reference to the new OCR track matching market pricing prior to the announcement. The RBNZ's OCR track matched market pricing of 2.85%. So they would not have expected much reaction at all. We believe we are seeing some profit taking in wholesale rates markets. Hedge funds would have placed some bets that the RBNZ may have come out a lot more dovish. We think the market will settle down, and end up moving back down to 2.85%, in time (and depending on what happens in offshore markets). And then, we expect another move by markets and the RBNZ down to 2.5%. Content Sourced from Original url
Scoop
28-05-2025
- Business
- Scoop
Reserve Bank Predicts More Job Losses
Press Release – New Zealand Labour Party The Reserve Bank warned about a weakening labour market, with unemployment remaining above 5% and expected to climb further this year. That contradicts Nationals promises of thousands of new jobs in their Budget. Thanks to their choices, more than 15,000 … The Reserve Bank's Monetary Policy Statement predicts a sluggish economy with higher inflation and more job losses. 'Just days after Nicola Willis slashed women's pay in order to deliver her so-called 'Growth Budget', growth is now predicted to slow,' Labour finance and economy spokesperson Barbara Edmonds said. 'The Reserve Bank cited low growth, higher inflation in the short term, and higher unemployment as key reasons why they cut rates today. Rate cuts are good for mortgage-holders, but there are some real alarm bells in the RBNZ's statement. 'Specifically, it projected sluggish economic growth of less than 1% in 2025, and said that inflation will continue to rise in the short term. 'Most concerning, the Reserve Bank warned about a weakening labour market, with unemployment remaining above 5% and expected to climb further this year. That contradicts National's promises of thousands of new jobs in their Budget. Thanks to their choices, more than 15,000 construction jobs have been lost. 'The Government claims to have delivered a 'Growth Budget' but the only growth we can see is growing unemployment, growing prices, and a growing pay gap between men and women. 'Instead of helping people through tough times, the Government has chosen to cut jobs and take money from women's future pay, all so they can give it to tobacco, fossil fuel, and big tech companies. 'Labour would make different choices, investing in jobs, health, and homes to grow the economy and lift living standards for everyone,' Barbara Edmonds said.
Scoop
28-05-2025
- Business
- Scoop
Reserve Bank Predicts More Job Losses
The Reserve Bank's Monetary Policy Statement predicts a sluggish economy with higher inflation and more job losses. 'Just days after Nicola Willis slashed women's pay in order to deliver her so-called 'Growth Budget', growth is now predicted to slow,' Labour finance and economy spokesperson Barbara Edmonds said. 'The Reserve Bank cited low growth, higher inflation in the short term, and higher unemployment as key reasons why they cut rates today. Rate cuts are good for mortgage-holders, but there are some real alarm bells in the RBNZ's statement. 'Specifically, it projected sluggish economic growth of less than 1% in 2025, and said that inflation will continue to rise in the short term. 'Most concerning, the Reserve Bank warned about a weakening labour market, with unemployment remaining above 5% and expected to climb further this year. That contradicts National's promises of thousands of new jobs in their Budget. Thanks to their choices, more than 15,000 construction jobs have been lost. 'The Government claims to have delivered a 'Growth Budget' but the only growth we can see is growing unemployment, growing prices, and a growing pay gap between men and women. 'Instead of helping people through tough times, the Government has chosen to cut jobs and take money from women's future pay, all so they can give it to tobacco, fossil fuel, and big tech companies. 'Labour would make different choices, investing in jobs, health, and homes to grow the economy and lift living standards for everyone,' Barbara Edmonds said.
Scoop
28-05-2025
- Business
- Scoop
Further Drop In Cash Rate Good News For Kiwis
Press Release – New Zealand Government A lower OCR means lower interest rates for Kiwi businesses and households. For families, it means more money in the household budget and for first home buyers it makes servicing a mortgage more affordable. For businesses, it means lower borrowing costs and customers … Minister of Finance Kiwis can look forward to further falls in interest rates following today's Monetary Policy Statement, Finance Minister Nicola Willis says. The Reserve Bank today reduced the Official Cash Rate (OCR) from 3.5 to 3.25 per cent, the sixth consecutive reduction since August last year. 'A lower OCR means lower interest rates for Kiwi businesses and households. For families, it means more money in the household budget and for first home buyers it makes servicing a mortgage more affordable. For businesses, it means lower borrowing costs and customers with more money to spend. 'Today's announcement shows the work done by the Government to take the pressure off inflation by bringing public spending back under control is continuing to pay dividends. 'In the past nine months the OCR has now fallen 2.25 percentage points with more reductions forecast by the Reserve Bank. 'The impact of this on an individual family will depend on the terms of their mortgage. But, as an example, someone repaying a $500,000 mortgage over 25 years will be more than $300 better off per fortnight if their mortgage rate falls by 2.25 percentage points. 'Our economy is now recovering, but that recovery cannot be taken for granted. Global uncertainty remains high and this presents potential challenges to New Zealand's growth, inflation and interest rate outlook. 'Now, more than ever, the Government must exercise responsible economic and fiscal management. Our recent Budget did just that, with careful initiatives to drive growth while continuing to put the books back in order. 'Kiwi families have paid a heavy price for the previous government's reckless spending. It pushed inflation up to decades-high levels, drove up interest rates, ate away the value of earnings and savings and battered the Government's books. 'Our Government will continue the work to secure economic and fiscal recovery so that New Zealanders can get ahead'.
