RBNZ overview
Reserve bank of New Zealand (RBNZ) is up for releasing its latest interest rate decision and rate statement today on 12 pm Syd/9am Sing/HK or 01:00 GMT.
Markets are looking for the RBNZ to hold the official cash rate (OCR) at 1.75% with a slightly dovish shift in the rate statement in order to confirm expectations of a rate cut in November or early 2020. The OCR decision will join the RBNZ rate statement but won’t accompany forward guidance neither the press conference from the central bank Governor.
Various banks came out with their forecasts ahead of the event but all of them expect no change in today’s monetary policy while having differences over the bearish outlook.
Analysts at ANZ say,
A steady hand at 1.75% is assured. We expect Governor Orr to repeat the key lines from the Feb MPS: “We expect to keep the OCR at this level through 2019 and 2020. The direction of our next OCR move could be up or down.” While there has been plenty of dovish momentum in global markets in recent weeks and markets price around a 70% chance of a rate cut by end-2019, New Zealand’s decent Q4 GDP data last week argues for limited change in the statement from 13 February.
TD Securities say,
The RBNZ OCR Review is widely expected to make the smallest ripple possible. The recent Dec qtr GDP report revealed that domestic demand was strong (consumption and investment, public and private) while trade was thought to be neutral for growth, but in the end added another +0.6%pts. With inflation expectations anchored just above 2% and maximum sustainable employment achieved, there are no triggers for the RBNZ to change its February stance where the next cash rate move “could be up or down”, and that the cash rates is likely to stay “unchanged through 2019 and 2020”. There are no updated forecasts, no OCR forward guidance nor press conference, these are scheduled for 8 May.
How could the RBNZ affect NZD/USD?
Given the likelihood of no major announcements from the RBNZ, the NZD/USD pair may struggle around nine-month-old descending trend-line resistance of 0.6915 should the central-bank repeats its February statement indicating next cash rate move “could be up or down”.
However, a dovish tilt could drag the pair towards 0.6870 immediate support-line ahead of highlighting 50-day simple moving average (SMA) of 0.6830.
On the contrary, an upbeat report statement might help the Kiwi surpass 0.6915 upside barrier and rally towards 0.6940, 0.6970 and 0.7000 resistances.
Key notes:
RBNZ: No fireworks coming - TDS
NZD/USD remains volatile near 0.6900, all eyes on RBNZ
NZD/USD Technical Analysis: Kiwi bears looking at 0.6890 ahead of RBNZ
About the RBNZ interest decision and statement
The RBNZ interest rate decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the NZD. The RBNZ rate statement contains the explanations of their decision on interest rates and commentary about the economic conditions that influenced their decision.
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