In assessing the how the landscape differs now from what the RBNZ faced in September, the key difference is undoubtedlythe higher NZD. Since the September Monetary Policy Statement (MPS) the NZD has strengthened markedly against boththe USD and AUD. The NZD/USD change was largely driven by the Fed’s decision in September not to ‘taper’ its assetpurchases and the subsequent expectation that ‘tapering’ will most likely not begin until March next year. NZD has alsostrengthened against the AUD markedly, as the RBA has talked the AUD lower and some Australian economic data havecome in weaker than expected.
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Commonwealth Bank