Home / Forex Analysis / Global Economic Weakness May Increase Likelihood of RBNZ Rate Cut

Global Economic Weakness May Increase Likelihood of RBNZ Rate Cut

Global Economic Weakness May Increase Likelihood of RBNZ Rate Cut in the Future

After weak data in the US and on the back of RBNZ verbal intervention, odds of an RBNZ rate cut are rising. However, most economists agree that loosening in New Zealand is likely to be short-lived and not likely at the meeting today.

There will be no media conference for the RBNZ meeting today

Comments from official may suggest RBNZ to stay the course:

Speaking at the regional Chamber of Commerce lunch on Thursday, the Reserve Bank of New Zealand (RBNZ) deputy governor John McDermott appeared to rule out the possibility of a rate hike in the near future but said that a rate cut could be warranted if demand began to weaken.

Key Quotes from the speech:

“At present, the Bank is not considering any increase in interest rates,”

“Before considering any tightening in monetary policy we would need to be confident that increased capacity utilisation and labour market tightness was generating, or about to generate, a substantial increase in inflation.”

“The timing of future adjustments in interest rates will depend on the evolution of inflationary pressures in both the traded and non-traded sectors. We continue to monitor and carefully assess the emerging flow of economic data.”

Timothy Kelly
Follow me