Currency talk: A spanner in the works for the RBNZ
Jason Walls and NZForex's Alex Hill discuss the global currency market news on NBR Radio and on demand on MyNBR Radio.
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The likelihood of an official cash rate (OCR) cut by the Reserve Bank of New Zealand (RBNZ) this Thursday has lost some momentum.
With the country’s central bank gearing up to make a decision, a few factors cannot be ignored.
NZ Forex head of corporate FX Alex Hill says the New Zealand economy has recovered a lot since the RBNZ’s September meeting.
On September 10, RBNZ governor Graeme Wheeler cut rates to 2.75% and indicated more reductions were on the way.
The outlook for the economy was much bleaker.
But things have improved since then, with business and consumer confidence both showing signs of momentum. Economic growth is still projected to remain stable.
Although there is a good case for holding, the case is equally as good for cutting.
Inflation is still a big problem for the RBNZ, last quarter coming in at 0.4% quarter-on-quarter. Add that to the increase in unemployment and the doves have a good argument too.
A lot, however, boils down to what the US Federal Reserve does with its interest rates next week.
At this stage, the vast majority of analysts are expecting the Fed to hike rates. This would force the US dollar up against the kiwi and help to import inflation.
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Tue, 08 Dec 2015
Tue, 08 Dec 2015
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Currency talk: A spanner in the works for the RBNZ
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