Greetings fellow traders!
Today i thought i might share my opinion on what to expect on the OCR Decision of the RBNZ which is to be announced on 11 Aug next Thursday.
The Manufacturing PMI grew to 57.7 in June from 57.2 in May which is the highest reading since January this year.
The Westpac McDermott Miller Consumer Confidence Index came in at 106 for Q2, shrinking from 109.With the latest high being Q1 2014 at 121.7, consumer confidence will probably keep going lower for the time being.
According to OECD, Total Employment grew at a YTD average of 0.47% based on QoQ percentile change, with the latest quarter reported (Q1 2016) coming in at 1.52% growth.
The Total CPI grew at a YTD QoQ average of 0.1% and the CPI Ex Food & Energy grew by 0.28% while the Total PPI shrunk by 0.51%. Keep in mind that the latest data available for PPI is Q1 2016 meaning that PPI is lagging by 1 Quarter the CPI data.
The situation looks fairly stable but Inflation is definitely lower than what can be considered healthy. But it isn't anything "flashy" like the deflationary situation in Japan, which required a new Stimulus Package.
The M2 Money Supply grew at a YTD weekly average annualized rate of 11% which is fairly stable.
The 10YR Treasury Yield according to OECD averaged a steady YTD MoM of 3.16%
The Central Bank Balance Sheet as a percentage of GDP is held steady at a stable 10% according to the World Bank with no significant change since Q2 of 2013.
The Debt/GDP Ratio is at a fairly manageable 30% and the Liquidity Cover of the Goverment's Federal Spending covering the Interest paid on the Government's Debt is held at a very comfortable ratio of 15.
Keep in mind that the Federal Spending as a percent of GDP is 8% higher than the Federal Income.
Lastly, interest rate is currently held at 2.25% the lowest since 1991 with the latest decrease in March 2016. The previous all time low was 2.5% and the last hike on March 2014 where the rate was increased to 2.75%.
Keeping in perspective the economic conditions around the globe, for the time being, the situation looks fairly stable and keeping in mind that the interest rates were held at the previous all time low of 2.5% from March 2011 since March 2014, the Reserve Bank of New Zealand will most likely keep the interest rate at 2.25% for the time being.
If you have any questions regarding the data feel free to ask!