RBNZ expected to remain “on hold” in 2020 – UOB


Lee Sue Ann, Economist at UOB Group, assessed the recent RBNZ event.

Key Quotes

“The Reserve Bank of New Zealand (RBNZ) decided to keep its official cash rate (OCR) unchanged at 1.00% at its first monetary policy meeting for the year. In its accompanying press release, the RBNZ acknowledged that ‘the COVID-19 (coronavirus) outbreak is an emerging downside risk’, but assumed that the “overall economic impact of the coronavirus outbreak in New Zealand will be of a short duration, with most of the impacts in the first half of 2020”.

“In fact, the RBNZ took on a more hawkish stance, given that the economic numbers out of New Zealand since it last met have been relatively stronger, by and large. The RBNZ’s forecasts for the OCR now suggest that, at present, it may not cut rates at all this year, unless the coronavirus outbreak has a bigger-than-expected impact on growth.”

“The RBNZ also emphasised that there was still time to cut rates to support the economy if needed at a later date. Whilst trimming its first quarter growth forecast to 0.4% from 0.7%, the RBNZ revised higher the subsequent quarters.”

We have been holding onto the minority view that the RBNZ will maintain its OCR this year. Today’s meeting certainly reinforces our view that the RBNZ is done cutting rates for now, following the cumulative 75bps rate cuts last year.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD looks to test 1.0800 ahead of German ZEW

Despite the latest recovery attempt from a new 34-month of 1.0823 reached in early Asia, the sentiment around the EUR/USD pair remains undermined by the German economic growth concerns and broad US dollar strength. Focus on German ZEW, coronavirus updates.

EUR/USD News

GBP/USD extends losses to sub-1.3000 area, UK unemployment rate in focus

GBP/USD stays mildly negative around 1.30 while heading into the London open on Tuesday. UK’s Brexit negotiator shares the same view as PM Boris Johnson, increases the risks of hard departure. UK employment statistics will be the key to clarify on the BOE’s bearish bias.

GBP/USD News

UK jobs preview: 3 reasons why Cable could bounce even if wage growth slows

Lower wages are bad news for workers and usually also for the pound – but these are abnormal times, and sterling may shine in response to the UK's December jobs report. The focus is on wage growth 

Read more

Gold: Positive beyond six-week-old falling trendline

Gold prices take the bids to $1,586.50, +0.35%, during the pre-European session on Tuesday. The yellow metal recently broke a downward sloping trend line stretched from January 08. Early-month top on the buyer’s radar.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex MAJORS

Cryptocurrencies

Signatures