What's to come after RBNZ's interest rate cut today

Saxo Capital Markets Australia

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After the Reserve Bank of New Zealand cut the policy rate to 3.25% today, the Kiwi Dollar slumped to 70.20 within seconds of the announcement. Markets are now positioning for another cut, possibly in July. Managing Director of Technical Research Limited Max McKegg explains one of the reasons the bank gave for the cut is that national income is falling and the exchange rate needs to adjust lower. Mr McKegg says that “with a significant fall in national income and an economy expanding at a level that is not putting pressure on resources, it was hard for the bank to argue there was much prospect of the inflation rate rising from close to zero now to the 2% target anytime soon. Hence the rate cut to help things along. Now the RBNZ can credibly put out this forecast, with its target being met by late next year…” To read more visit: (VIEW LINK)

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