The Reserve Bank of New Zealand (RBNZ) released its interest rate decision on Wednesday. The RBNZ kept its interest rate unchanged at 3.50%. This decision was expected by analysts. But the kiwi jumped against the greenback. What happened? The RBNZ Governor Graeme Wheeler said that interest rate hike "is expected to be required at a later stage" because of the economic growth of around 3% and as New Zealand's jobless rate declines.
It's a little bit strange because Wheeler said several times before that New Zealand's currency is "unjustifiably and unsustainably high". He also made the same statement on Wednesday. But interest rate hike will lead to higher New Zealand dollar.
It's unlikely that New Zealand's will raise its interest rate in near future. The reason could be a drop in consumer inflation in the last quarter. New Zealand's consumer prices declined to an annual rate of 1.0% in the third quarter from 1.6% in the second quarter. Consumer prices should also decrease in the fourth quarter as oil prices are declining.
Declining dairy prices, New Zealand's most important export product, could be the next reason that the RBNZ will keep its interest rate unchanged.
A slowdown of Chinese economy could also have a negative impact on New Zealand's economy. China is New Zealand's second biggest trading partner.
© 2000-2021. All rights reserved.
This site is managed by Teletrade D.J. Limited 20599 IBC 2012 (First Floor, First St. Vincent Bank Ltd Building, James Street, Kingstown, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at firstname.lastname@example.org.