“Confident around fiscal spending that will happen and will shift the burden of monetary policy”, said Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr while addressing the post-monetary policy decision press conference on Wednesday.
The RBNZ left the Official Cash Rate (OCR) unchanged at 1.0% in the last hour, although surprised the markets by providing a hawkish shift in its policy guidance. The central bank did not forecast any rate cut this year.
Looking at assumption of around 6-week disruption due to coronavirus.
See the main economic effects of coronavirus going through trade, finance and broader confidence channels.
Many signs that household spending growth is increasing.
Coronavirus that the bank has taken half of the GDP growth expected in Q1 off the table in projections.
Does not see a need for cut with regard to a specific event.
Unconventional monetary policy not core to our outlook, but still preparing if ever needed.
NZD/USD looks to 0.6500
The bid tone around the Kiwi dollar is gradually extending, as Orr downplays China coronavirus risks and said that he doesn’t see any need for a rate cut this year. At the press time, NZD/USD prints a new four-day high of 0.6472, up over 1% so far.
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