FXstreet.com

Weekly Commentary

5

0

Cause for a pause

Mon, Jun 8 2009, 06:33 GMT
by Westpac Institutional Bank Team

Westpac Institutional Bank


Thursday’s Monetary Policy Statement comes at an interesting juncture for the New Zealand economy.

Activity is still contracting in most parts of the world, but at a slower pace than seen earlier this year – and for a change, the outlook for growth doesn’t seem to have deteriorated further since the last OCR review. Meanwhile, financial markets are sending a clear signal that they believe the worst-case scenarios for the global economy have been avoided.

It’s clear from the RBNZ’s recent comments that they are sceptical about the near-term prospects for recovery, and they remain biased towards further easing if needed. Even so, we think there is enough reason to leave the OCR unchanged this time – if their scepticism turns out to be justified, they retain the option of cutting rates again later in the year, while if the ‘green shoots’ turn out to be genuine, they will have little to regret by not easing further.

Developments since the April OCR review have been mixed – which in itself is a notable development. Monthly indicators in most parts of the world suggest that manufacturing, trade and house prices have been falling at a slower pace in recent months. To be clear, this is hardly a sign of strength – the best we can say is that a global economy that was in freefall at the end of last year has since deployed the parachute. But the change in momentum is a necessary first step towards recovery.


Archive

Westpac Institutional Bank  | ABN 33 007 457 14
http://www.westpac.co.nz | natalie_denne@westpac.co.nz

Legal disclaimer and risk disclosure

No disclaimer available

Related reports

Video Interview with Ashraf Laidi: The worst of the economic crisis is behind us, 'for now'. by FXstreet.com
Thu, Oct 29 2009, 15:02 GMT

Economic Monitor - World: Intensifying signals of recovery by National Bank of Canada
Wed, Oct 28 2009, 11:28 GMT

Will China begin to withdraw stimulus? by Easy Forex
Tue, Oct 27 2009, 14:17 GMT

Monthly Fixed Income Monitor - Another look at the Taylor rule by National Bank of Canada
Tue, Oct 27 2009, 14:05 GMT

US: Positive revenue growth just around the corner by National Bank of Canada
Tue, Oct 27 2009, 09:56 GMT

crisis

View All

Related content


Interested in forex trading? forex brokerage firms!


FX Solutions LLC
Contact the broker/FDM
Open a demo account
ACM Advanced Currency Markets SA
Contact the broker/FDM
Open a demo account
Alpari (US), LLC
Contact the broker/FDM
Open a demo account
Interbank FX, LLC
Contact the broker/FDM
Open a demo account
GFT
Contact the broker/FDM
Open a demo account

GET CASH BACK FOR YOUR TRADES!   Learn more about the Pip Rebate Program

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.