OPEC hits crude, Kiwi flies on RBNZ: As expected the Reserve Bank of New Zealand (RBNZ) left interest rates steady at 3.50% in December

OPEC hits crude, Kiwi flies on RBNZ: As expected the Reserve Bank of New Zealand (RBNZ) left interest rates steady at 3.50% in December. In the accompanying monetary policy statement the Board noted that 'the exchange rate remains unjustifiably and unsustainably high' with members expecting to 'see a further significant depreciation'. Despite this headwind members expect growth 'at or above trend through 2016 with unemployment continuing to decline'. As opposed to their previous meeting where the Board went policy neutral, today they noted that with 'modest inflation pressures the expansion can be sustained for longer than previously expected with a more gradual increase in interest rates'. Keeping with that theme they stated 'with output projected to grow at or above capacity, CPI inflation is expected to approach the 2 percent midpoint of the Reserve Bank's target range in the latter part of the forecast period' with 'some further increase in the OCR expected to be required at a later stage'. In other words neutral bias gone, tightening bias returns. (VIEW LINK)