- News & Education
The Reserve Bank of New Zealand (RBNZ) made its first interest rate decision and monetary policy, but it was not what the market participants expected. The Central Bank did not follow the same dovish theme seen by other central banks. The Official Cash Rate (OCR) was left at 1.75%, as widely expected, and the RBNZ expects to keep the OCR at this level through 2019 and 2020.
“The direction of our next OCR move could be up or down.”
Governor Adrian Orr has downplayed the odds of a rate cut but has not entirely removed it off the table. Given the global risks and uncertainties, the chance of a rate cut is not eliminated but has not increased either.
The RBNZ strikes a “data-dependent” approach and says that they are comfortable with the inflation target and mid-point pressures. The Governor stretched that “they need data from the financial markets around how they are pricing and seeing the risks as well.” When asked about the rise in unemployment, Orr mentioned that “the surveys are not reflecting what we hear about the business tables”, and that “employment is near its maximum sustainable level”. Overall, the big picture here is that the RBNZ appears more confident that other central banks on its outlook for the New Zealand economy. The Central Bank noted that the low-interest rates and expected government spending would eventually support a pick-up in Gross Domestic Product over 2019.
This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk. For more information on trading Forex, check out our regular free Forex webinars.
Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.