Mario Blascak, PhD
Independent Analyst
The Reserve Bank of New Zealand (RBNZ) is widely expected to leave the key interest rates at record lows for about another year, as the tight labor market in New Zealand is not enough to press on prices to rise.
The RBNZ is set to publish its quarterly monetary policy statement and review the benchmark Official Cash Rate (OCR) on Thursday Wellington time, that equals to London evening.
The job is set to be easy for the RBNZ with the key quarterly labor market report due just one day before the policy announcement. Statistics New Zealand will publish the household labor force survey on Tuesday evening London time with the market expecting the unemployment rate to remain steady at 4.6%, while some think the rate will drop to 4.5%, representing a new nine-year low.
While the NZ economy seems to go full steam ahead with the unemployment rate falling, the main policy target, the inflation rate remains stubbornly low. In January Statistics New Zealand said the consumer price index decelerated to 1.6% y/y with market analysts now seeing very little chance of monetary policy tightening on less than a year time from now.
Economists at all of the four major Australian and New Zealand banks now expect the OCR to remain unchanged until at least early 2019. The forecasts from RBNZ are even more conservative anticipating the first policy rate move in 2020.
The NZ interest rate outlook is in contrast with major central banks around the world.
After slashing interest rates to effectively zero in the wake of the global financial crisis, major central banks in Europe, the UK and in particular the US, are all expected to raise interest rates in 2018.
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. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: 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 invest in 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.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.