RBNZ Expected to Cut Looking to Curb Rise of NZD

In early 2014, the Reserve Bank of New Zealand (RBNZ) became the first major central bank to hike interest rates since the European debt crisis. Two years later, policymakers are in a sustained easing cycle.
A surging currency and a fiery housing market are weighing on the RBNZ as it debates just how much stimulus to unveil at Thursday’s meeting.

The key question isn’t whether the RBNZ is going to cut, but whether their stimulus will be enough to assuage concerns about the persistent softness in inflation, according to economists at Westpac Bank.

Three weeks ago, the central bank held a special economic assessment update in which it said “further policy easing will be required” for consumer price inflation (CPI) to hit its 1-3 percent target range. An appreciating currency has hindered price increases, with the kiwi dollar around 6 percent higher than the central bank’s expectations, Westpac noted.

Year-to-date, the kiwi is more than 5 percent higher against the greenback while CPI has been unchanged at 0.4 percent on-year since January. In fact, annual CPI readings have registered gains of fewer than 1 percent since the December 2014 quarter.

via CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.