The Reserve Bank of New Zealand performed a bit of a pivot in its brief statement yesterday.
ICYMI:
RBNZ leaves it cash rate on hold at 5.5%, as expectedNZD/USD drops after the RBNZ statement – hints of a closer rate cutNew Zealand rate pricing implies 25bp rate cut for October vs. 16 before RBNZ statementWestpac on the RBNZ statement today – “less hawkish” than May statement
BNZ moved quickly to bring forward its expectation for the first rate cut from the RBNZ to November 2024:
The statement,
accompanying the expected ‘on hold’ decision,
represented a significant moderation in the Bank’s hawkish
stance from the May Policy Statement. Unlike May, a rate
hike wasn’t discussed, and alongside weak activity it was
noted that restrictive monetary policy has ‘significantly
reduced consumer price inflation’. As a result of the shift in
tone, we have reverted to forecasting the RBNZ will cut
rates in November.
NZD/USD update, its been sold on bounces since the statement but has not extended much lower yet. Exuberance (yeah, deliberate choice of word, I’m just holding off adding ‘irrational’ as a prefix a little while longer) over expected Federal Reserve rate cuts ahead has supported it, and other ‘risk’ assets:
This article was written by Eamonn Sheridan at www.forexlive.com.
