Synopsis:

Credit Agricole sees limited market impact from RBNZ Governor Adrian Orr’s unexpected resignation, as monetary policy decisions are now made collectively by the central bank’s Board. With inflation nearing target and rate cuts well underway, the RBNZ is expected to maintain its dovish stance, keeping NZD under pressure.

Key Points:

1️⃣ Orr’s Departure Comes Amid a Dovish RBNZ 🏦

• Governor Adrian Orr resigns three years into his five-year term.
• Deputy Governor Christian Hawkesby takes over as acting Governor.

2️⃣ Limited Market Impact Due to Board-Driven Policy 📉

• Unlike past transitions, the Governor no longer has sole control over monetary policy.
• The full RBNZ Board has backed the recent rate cuts, reducing uncertainty.

3️⃣ RBNZ’s Rate Cut Cycle Continues 💰

• The central bank has cut rates by 200bp since August, including three 50bp cuts.
• With inflation nearing the 1-3% target, the easing cycle is expected to continue.

4️⃣ Political Tensions Likely Had a Role in Orr’s Exit 🇳🇿

• Orr had a history of clashing with Finance Minister Nicola Willis.
• The government is pressing for cost-cutting at the RBNZ amid funding negotiations.

Conclusion:

Credit Agricole does not see the resignation materially impacting NZD, as the RBNZ’s policy trajectory remains intact. The bank’s dovish stance is expected to persist, keeping downside pressure on the currency despite leadership changes.