Published: May 8, 2019 1:10 AM EST
Currency Analyst
NewsMovesMarketsForex
Republic Bank of New Zealand (RBNZ) cuts interest rates by 25 bases points to 1.50%, NZD USD sets seven month Lows on May 7, 2019. NZD retreats 79 pips to .6524 handle immediately after the RBNZ economic news release The lowest the Kiwi verse its counter part the Greenback has been since October 28, 2018.
The NZD USD has been trading in a relatively tight range .most of the trading day between a intraday low of .6594 and a high of .6605 waiting for the highly anticipated Economic New Zealand News release.
The New Zealand Monetary Policy Committee said that it decided a lower OCR..“to support the outlook for employment and inflation consistent with its policy remit.
Global economic growth has slowed since mid-2018, easing demand for New Zealand’s goods and services. This lower global growth has prompted foreign central banks to ease their monetary policy stances, supporting growth prospects.
However, there is uncertainty about the global economic outlook. Trade concerns remain, while some other indicators suggest trading-partner growth is stabilising.
Domestic growth slowed from the second half of 2018. Reduced population growth through lower net immigration, and continuing house price softness in some areas, has tempered the growth in household spending. Ongoing low business sentiment, tighter profit margins, and competition for resources has restrained investment.
Employment is near its maximum sustainable level. However, the outlook for employment growth is more subdued and capacity pressure is expected to ease slightly in 2019. Consequently, inflationary pressure is projected to rise only slowly.
Given this employment and inflation outlook, a lower OCR now is most consistent with achieving our objectives and provides a more balanced outlook for interest rates.
The Republic Bank of New Zealand has been holding a neutral posture keeping the rate at 1.75% since 2016, approximately two and half years. The Central Bank decided to lower the rates .25 percent based on various domestic economic down turns, risk aversions and global uncertainties.
NZD USD Retreats to .6525 from a high of .6503 After RBNZ cuts Rates by .25 bases point’s
The Kiwi against its rival the Green Back is currently trading in a range between .6524 and .6583 in the Asian trading session as of 11.24 pm est. The currency is trading well below the 200 day Simple Moving Average and the RSI is reading 38.87 as of this writing.
