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).