Following the conclusion of its April policy meeting on Wednesday, Reserve Bank of New Zealand (RBNZ) board members decided to maintain the Official Cash Rate (OCR) at 5.50%.
This decision was in line with market expectations.
RBNZ Monetary Policy Statement (MPS) Overview
New Zealand’s economy continues to evolve in line with the Monetary Policy Committee’s expectations.
A restrictive monetary policy stance remains necessary to further reduce capacity pressures and inflation.
New Zealand’s economic growth remains weak.
The Committee believes that keeping the OCR at a restrictive level for a period of time will return consumer price inflation to within its target range of 1 to 3 percent for the calendar year.
Minutes of the RBNZ interest rate decision meeting
Members agreed that they continued to believe that monetary policy was constraining demand.
Repressive monetary policy is helping to ease capacity pressures to ensure inflation returns to target.
Capacity pressures are expected to decline further, supporting continued declines in inflation.
Members agreed that they continued to believe that monetary policy was constraining demand.
Indicators of business confidence have declined, and companies’ own expectations regarding corporate activities and investments have also weakened.
Although short-term corporate pricing intentions have declined, they are still rising, partly reflecting increases in both realized and expected costs.
Continued strength in net migration is supporting increases in aggregate consumer spending and housing costs.
The Committee agreed that interest rates should be maintained at restrictive levels for a sustained period.
Members agreed that the risk balance has remained largely unchanged since February.
Members agreed that while inflation remained outside the target range and inflation expectations and pricing intentions remained high, there remained limited margin for extending the timeframe for achieving the inflation target.
Members agreed that continued services inflation remained a risk and price inflation remained high.
If restrictive monetary policy continues in an environment of sluggish global growth, it could lead to a faster-than-expected decline in inflation.
NZD/USD reaction to RBNZ interest rate decision
In an immediate reaction to the RBNZ situation, the New Zealand dollar gained new value. The NZD/USD pair is currently trading around 0.6067, up 0.15% on the day.
NZD/USD: 5 minute chart
New Zealand dollar price today
The table below shows the percentage change of the New Zealand Dollar (NZD) against major currencies today. The New Zealand dollar was the strongest.
| USD | EUR | GBP | CAD | australian dollar | JPY | new zealand dollar | Swiss franc | |
| USD | 0.04% | 0.00% | -0.09% | 0.05% | -0.04% | -0.05% | 0.07% | |
| EUR | -0.04% | -0.04% | -0.11% | 0.02% | -0.06% | -0.09% | 0.04% | |
| GBP | 0.00% | 0.03% | -0.08% | 0.05% | -0.03% | -0.05% | 0.08% | |
| CAD | 0.08% | 0.11% | 0.09% | 0.12% | 0.04% | 0.02% | 0.15% | |
| australian dollar | -0.06% | -0.02% | -0.03% | -0.11% | -0.08% | -0.10% | 0.03% | |
| JPY | 0.03% | 0.07% | 0.04% | -0.05% | 0.08% | -0.01% | 0.10% | |
| new zealand dollar | -0.06% | -0.02% | -0.06% | -0.13% | -0.01% | -0.09% | 0.01% | |
| Swiss franc | -0.08% | -0.03% | -0.07% | -0.14% | -0.02% | -0.10% | -0.12% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Euro from the left column and move along the horizontal line to Japanese Yen, the percentage change displayed in the box represents EUR (base)/JPY (estimate).
This section below was published at 21:15 Japan time on Tuesday as a preview of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.
- The Reserve Bank of New Zealand plans to keep interest rates unchanged at 5.50% on Wednesday.
- The wording of the policy statement will provide clues as to the RBNZ’s interest rate outlook.
- New Zealand dollar braces for big reaction to RBNZ policy announcement.
The Reserve Bank of New Zealand (RBNZ) is widely expected to keep the Official Cash Rate (OCR) at 5.50% for the sixth consecutive meeting after Wednesday’s monetary policy meeting.
The New Zealand dollar (NZD) is poised for a strong market reaction to RBNZ policy announcements, despite the absence of RBNZ Governor Adrian Orr’s press conference or update on economic forecasts.
What do you expect from the RBNZ’s interest rate decision?
The decision to keep interest rates on hold is fully priced in and markets will be closely scrutinizing the wording and tone of the Reserve Bank of New Zealand’s Monetary Policy Statement (MPS).
After extending the moratorium in February, the RBNZ policy statement said: “Subject to the central economic outlook, the Monetary Policy Committee believes that the OCR will need to remain near current levels for an extended period to achieve its inflation target.” I’m anticipating that.”
Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said in a press conference after the policy meeting that “we did have a discussion about raising rates,” adding there was “strong consensus that rates are adequate.”
“We remain concerned about underlying inflation, the extent to which rising inflation is easing,” Orr said.
Since the February meeting, little notable data has been released from New Zealand to help gauge when the RBNZ is likely to change policy. But with New Zealand’s economy facing its second recession in 18 months and consumer confidence plummeting, markets may not be surprised by the dovish hold.
New Zealand’s gross domestic product (GDP) growth contracted by 0.1% in the fourth quarter of 2023, following a contraction of 0.3% in the third quarter. Meanwhile, the ANZ Roy Morgan New Zealand Consumer Confidence Index fell 8.1 points in March to 86.4.
According to BBH analysts, the market is currently pricing in the RBNZ’s first rate cut in August, taking total easing this year to 75 bps.
Meanwhile, the RBNZ is likely to stick to the wording of February’s MPS and wait for the first quarter’s Consumer Price Index (CPI) report and labor market data before considering any changes to its policy outlook.
New Zealand’s annual consumer price index (CPI) rose 4.7% in the December quarter, the smallest annual rise in more than two years, according to data released by Stats NZ. However, this figure remains well above the RBNZ’s target of 1.0-3.0%.
Ahead of the RBNZ’s policy announcement, TD Securities analysts said: “The RBNZ is expected to keep the OCR unchanged at 5.50%. Limited data flow since the February MPS suggests the Bank will issue a similarly worded statement again.”
“GDP, released a week after the February MPS, was slightly below the World Bank’s forecast, but rising oil prices, a weak NZ dollar, and monthly survey releases including price and employment statistics meant that the outlook for inflation remained difficult. “This suggests that,” the analysts added.
What impact will the RBNZ’s interest rate decisions have on the New Zealand dollar?
The U.S. dollar maintains its dominance across the board after strong non-farm jobs data prompted investors to lower expectations for the U.S. Federal Reserve in June. Risks for the NZD/USD pair appear to be biased to the downside heading into Wednesday’s RBNZ showdown (Fed) rate cut.
Furthermore, expectations for the RBNZ to maintain the status quo have also put the Kiwi dollar on the back burner, with a fresh decline expected if the RBNZ policy statement signals a sooner-than-expected rate cut.
Conversely, the NZD/USD pair will recover from its five-month low of 0.5939 if the MPS signals that the RBNZ may stick to its “longer-term higher” interest rate outlook amid rising inflation levels. There is a possibility that the momentum will be regained.
FXStreet Senior Analyst Dhwani Mehta provides a brief technical outlook for New Zealand Dollar trading on the RBNZ policy announcement: “The NZD/USD pair is set for a key 21-day simple move towards recovery. “We are challenging the average line (SMA) of 0.6036.” However, the 14-day Relative Strength Index (RSI) indicator remains below the 50 level, suggesting that sellers are likely to take the reins. ”
“The immediate upside hurdle is the 200-day SMA horizon at 0.6068, above which the 0.6100 round level will come into play. NZD buyers will target the 100-day SMA at 0.6138. , a sustained move below the 0.6000 level could open the door to test the April 5 low at 0.5985. Further south, the 5-month low at 0.5939 could be a tough nut for NZD/USD sellers. There is a gender,” Dhwani added.
economic indicators
RBNZ interest rate decision
of reserve bank of new zealand (RBNZ) will announce interest rate decisions after its scheduled seven annual policy meetings. If the RBNZ is hawkish and determines that inflationary pressures are rising, it will raise the Official Cash Rate (OCR) to contain inflation. This is positive for the New Zealand dollar (NZD) as higher interest rates attract more capital inflows. Similarly, when we reach the view that inflation is too low, the OCR tends to fall and the NZ dollar weakens.
Final release: Wednesday, April 10, 2024 02:00
frequency: irregular
Actual: 5.5%
consensus: 5.5%
previous: 5.5%
sauce: reserve bank of new zealand
RBNZ Frequently Asked Questions
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are to achieve and maintain price stability, which is achieved when the inflation rate, as measured by the Consumer Price Index (CPI), falls within the range of 1% to 3%, and to achieve maximum sustainable It’s about supporting employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) determines the appropriate level of the Official Cash Rate (OCR) depending on its objectives. If inflation is above target, banks will try to contain it by raising the key OCR, making borrowing more expensive for households and businesses and cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD), as they lead to higher yields and make the New Zealand Dollar (NZD) a more attractive place for investors. Conversely, when interest rates fall, the NZ dollar tends to fall.
Jobs are important to the Reserve Bank of New Zealand (RBNZ) because a tight labor market could drive inflation. The RBNZ’s goal of ‘maximizing sustainable employment’ is defined as the maximum use of labor resources that can be sustained over the long term without causing an acceleration in inflation. “Once employment reaches its maximum sustainable level, inflation will be low and stable. However, if employment remains above its maximum sustainable level for an extended period of time, prices will eventually rise more and more rapidly. , the MPC will have to raise interest rates to curb inflation,” the central bank said.
In extreme circumstances, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called quantitative easing. QE is the process by which the RBNZ prints local currency and uses it to purchase assets (usually government and corporate bonds) from banks and other financial institutions, increasing the domestic money supply and stimulating economic activity. It is intended to. QE typically results in a weaker New Zealand dollar (NZD). Quantitative easing is a last resort when simply lowering interest rates is unlikely to achieve the central bank’s objectives. RBNZ used this during the Covid-19 pandemic.
