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Business Weekly Economic Report 
RBNZ digs heels in on dovish tone
Monday, 02 November 2009

  • Last Thursday the RBNZ left the cash rate unchanged at 2.5%, as expected.  However, the accompanying statement was deliberately dovish, designed to try hose down market expectations of rate hikes.
  • The strategy worked for the RBNZ, with market pricing pared back sharply, now more in line with our own expectation that the RBNZ will start hiking around April 2010.
  • The NZ dollar dropped sharply against all the major crosses over the week, as the marked pared back expectations on NZ and Australian cash rates and offshore sentiment turned soar.

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Report Prepared by:

Jane Turner
ASB Economist
Phone: +64 9 374 8185
Fax: +64 9 302 0992







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