Published: Wed, November 13, 2019
Markets | By Otis Pena

Kiwi takes flight as New Zealand's central bank surprises by standing pat

Kiwi takes flight as New Zealand's central bank surprises by standing pat

Market expectations were weighted towards a rate cut at today's monetary policy statement.

The New Zealand dollar rose by the best part of a U.S. cent and an Australian cent after the Reserve Bank announced the OCR was on hold at 1 per cent.

In addition, Powell on Wednesday said he saw "sustained expansion" ahead for the country's economy, with low unemployment boosting household spending and the full impact of recent rate cuts still to be felt. The committee chose to leave the OCR unchanged.

The Reserve Bank said that interest rates will need to remain at low levels for a prolonged period to ensure inflation reaches the mid-point of its target range with employment around its maximum sustainable level.

In the post-meeting statement, the central bank noted that employment remained around its maximum sustainable level.

"We expect economic growth to remain subdued over the remainder of the calendar year".

Asian stocks fall on fears US-China trade stalling
Kennedy, as well as foreign leaders like former Soviet President Mikhail Gorbachev and Chinese Premier Li Keqiang. Trump added: "That's going to be true for other countries that mistreat us too". " Give me some of that ".

The Committee said that developments since its August statement didn't warrant a change to the OCR, which is already at a stimulatory setting, but that it will "remain prepared to act as required".

National Party finance spokesman Paul Goldsmith said another lowering of the Reserve Bank's growth forecast for 2019, down to 2 per cent, showed the economy was underperforming despite New Zealand's terms of trade being near record highs.

However, business sentiment remains weak and inflation has drifted further away from the midpoint of the RBNZ's 1-3 per cent target band.

Increases in wage growth and non-tradable inflation together with a weaker local dollar helped by an outsized 50 basis point cut in August, aided the Reserve Bank of New Zealand's (RBNZ) decision.

The decision dashed market expectations for a cut and sent the New Zealand dollar soaring, with the majority of the economists in a Reuters poll having tipped an easing in the final policy meeting for the year.

"Growth in global trade and manufacturing is weak and uncertainty remains high, dampening global business investment", the RBNZ said. Rising capacity pressures are projected to promote a pick-up in business investment. However, the RBNZ's monetary policy committee wasn't swayed that the key rate needed to be cut, although governor Adrian Orr indicated the bank was ready to act if more stimulus was needed.

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