NZD Currency Analysis

Currency Sentiment - Neutral 

 

The New Zealand central bank is not forecast to raise interest rates until 2020 as economic growth and rising inflation is not strong enough to warrant a rate hike anytime soon. 

We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.

 

RBNZ assistant governor McDermott says the chances of a rate cut have increased.

- RBNZ was worried long term bond yield's curve had priced in a rate hike
- Wanted markets to understand that a rate hike is currently off the table
- RBNZ needs to see growth pick up in Q3
- Would need to see core inflation back above 2% to hike
- He goes on to say that the central bank has been pushed nearer to a "trigger point" where they are expecting growth to pick up in Q3 otherwise they would have to reconsider the position they are taking right now (Cut Rates).

 

For more details please visit the Central Bank Monitor page for details on the RBNZ and the New Zealand economy.