Furthermore, the negative income effects from falling export prices were accentuated by a bounce in landed oil prices and an increase in refinery margins. The latter meant that the expected income gain of around $ per household from the initial oil price decline had halved. Several considerations underlay the Bank’s decision to cut the OCR in June 2015.
Statistical data revisions and the recent slowing in demand suggested that the output gap was likely to be smaller than forecast, non-tradables inflation looked to be low and stable, and the exchange rate had not adjusted sufficiently to the decline in the terms of trade.