This was the second busiest week of the year for central bank meetings, with the dovish rhetoric from earlier this year evolving into more nuanced warble. The Fed held rates, and the FOMC forecast only one hike this year (in December we think). The Bank of Japan did not take any new measures, but added an “inflation-overshooting commitment” and “yield curve control” to its policy toolkit.
Against this backdrop, six other central banks met over the last 24 hours; two cut policy rates, four left them unchanged. None are signaling policy tightening soon:
• The Reserve Bank of New Zealand held the Official Cash Rate (OCR) at 2.00%, in line with expectations. We continue to expect another two 25bp rate cuts.
• Bank kept policy unchanged at 0.5% in line with our and consensus expectations. The bigger surprise to markets, however, and subsequent NOK strength, came from a markedly more hawkish statement and forecast revisions. Looking ahead, we expect unchanged policy for the foreseeable future and now see downside risks to the pace of EURNOK depreciation we currently forecast.