A review of things you need to know before you go home on Friday; RBA says inflation to stay lower for longer; Fonterra's organic milk price forecast up 63%; swap rates sink; Govt's electric vehicle push to come at cost

Here are the key things you need to know before you leave work today.

TODAY'S MORTGAGE RATE CHANGES
ASB has cut its 2-year 'special' fixed rate by 20bps to 4.19%, making it a market leader along with TSB Bank. ASB has also hiked its 1-year and 18-month 'special' rates by 10bps to 4.25%. See this story for more. TSB has also introduced a new 6-month 'special' rate of 4.75%. 

TODAY'S DEPOSIT RATE CHANGES
No deposit rate changes today. 

AUST INFLATION LOWER FOR LONGER
The RBA has lowered its forecast for underlying inflation to between 1 and 2% for the year to December, from 2 to 3%, noting "broad based weakness in domestic cost pressures". That represents a half a percentage point revision from its previous inflation forecasts. The RBA now does not expect inflation to return to the lower end of its 2 to 3% target inflation range until 2018. The RBA has made the announcement in its Statement on Monetary Policy further to it earlier this week cutting its official cash rate to a record low of 1.75%. 

ORGANIC THE WAY TO GO
Fonterra is forecasting an opening market-linked organic milk price of $9.20 per kg/MS for the 2016/17 dairy season - an increase of 63% or $3.55 from the current season. Fonterra says: "Increasing demand for organic milk products, and organic food in general, is leading to high prices for these products in international markets. While global milk prices have been volatile recently, prices for organic dairy ingredients have remained at the same relatively high levels since 2013/14... The margins the Co-operative is achieving on its organic milk products are similar to some of its highest-earning consumer and food service products.” 

RETROFITTING FOIL INSULATION LIKELY TO BE BANNED
The Ministry of Business Innovation and Employment (MBIE) has begun consultation on a proposed ban on retrofitting foil insulation into existing residential buildings. MBIE proposes banning the practice under the Building Act, because of the risk that anyone installing foil could pierce live electrical cables when attaching it to the building's structure with fasteners such as staples or nails.

MIA WELCOMES ELECTRIC VEHICLE PUSH
The Motor Industry Association is welcoming Government incentives aimed at doubling the number of electric vehicles in New Zealand every year to reach 64,000 by 2021. It says: "Over the next five years, vehicle distributors will progressively bring in new models of electric vehicles, with the vast majority of these being plugin hybrid electric vehicles. However, these vehicles come at a premium price due to the level of technology in them compared to normal internal combustion engine vehicles. The uptake of plugin vehicles is expected to increase progressively over time but will remain a small overall component of total vehicle sales unless the incremental cost of purchasing them can be partially offset as happens in most countries."

HOW'S AU$18M FOR A SALARY?
Macquarie Group's chief executive, Nicholas Moore, is on track to becoming Australia's highest paid listed company boss, after being rewarded for hitting a record 2016 annual profit. The financial services heavyweight has beaten its 2008 profit, posting a AU$2.06 billion earnings result for year ended March 31. The company's annual report shows Moore's total remuneration jumped 10% to AU$18.1 million from AU$16.5 million in 2015 financial year.

SWAP RATES SINK
Wholesale swap rates have fallen sharply in the long end of the curve, flattening out the 2-10 swap curve in the process. Swap rates from 3-years to 10-years are now at record lows as noted in our earlier story here. The swap rate moves in NZ are approximately half of those across the Tasman today, where we have seen double digit declines in the 3-year to 10-year part of their swap curve.

NZD TURN-AROUND
After trending higher against most of the major currencies during the morning session the NZD did a rapid about turn against the USD at around 1.30pm. Coincidentally this was right about the time the RBA lowered its forecast for inflation. Subsequently the AUD sank, bond and swap yields fell away further. Although weaker against a number of the majors, the NZD is up against the Aussie and euro.

We are seeing some USD strength ahead of the weekend's Non-farm Payrolls report. BNZ in its daily currency commentary suggests a solid payrolls release, accompanied by stronger-than-expected average hourly earnings growth, could prompt the market to increasing its expectations for Fed rate hikes this year. 

The Kiwi dollar is at 68.5 USc, 92.7 AUc, 60.1 euro cents. The TWI-5 remains at 71.7. Check our real-time charts here.

You can now see an animation of this chart. Click on it, or click here.