The RBNZ is in an awful position as it tries to disseminate two key messages which might appear, at face value, contradictory. Given recent economic developments, the RBNZ will need to signal that it is on hold for the foreseeable future until there are clear signs of building inflationary pressure. Yet, at the same time, it will want to maintain its view that the cash rate needs to move, eventually, back to neutral, which must be at least 100 basis points higher than where it is now
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