The Reserve Bank has announced today that the official cash rate, or OCR, will remain unchanged at one per cent. "The most likely timing is the February and May MPS releases".
Interestingly, the RBNZ maintained that the low in the OCR is at 0.9% across the forecast horizon, which in turn has seen money markets place a 50% probability that the central bank will ease again in 2020.
"This is despite New Zealand's terms of trade being near record highs".
But the Reserve Bank's decision to instead keep the OCR on hold means banks will be scrambling to reassess the outlook for next year.
"(It) was heavy on rhetoric and light on detail, leaving markets none the wiser", National Australia Bank's senior FX strategist Rodrigo Catril said in a note.
"It was expected to be a rate cut so the interest rate traders would have gone into it betting on a fall", he said.
"This goes very much against the grain of what nearly all the analysts expected on the day", he said.
"Economic growth continued to slow in mid-2019 reflecting weak business investment and soft household spending", the bank said.
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The bank expects economic growth to remain subdued over the remainder of the calendar year.
The Reserve Bank said that interest rates will need to remain at low levels for a prolonged period to ensure inflation reaches the mid-point of its target range with employment around its maximum sustainable level.
The New Zealand dollar fell against all other most-traded currencies today, even its Australian counterpart, which was rather weak itself.
The decision dashed market expectations for a cut and sent the New Zealand dollar soaring, with the majority of the economists in a Reuters poll having tipped an easing in the final policy meeting for the year.
In a press conference after the monetary policy announcement, RBNZ Governor Adrian Orr said it was "certainly not the bank's conscious intention" to try to surprise people.
"We expect interest rates to remain low for a long time and it's a global phenomenon", RBNZ Chief Economist Yuong Ha told reporters.
A speech by U.S. President Donald Trump where he threatened to raise tariffs on China and criticised European Union trade policies before a November 14 deadline to decide whether to raise tariffs on European and Japanese carmakers also boosted demand for the negative-yielding Swiss currency.