Reserve Bank of New Zealand Cuts Interest Rates
by Richard Lee
As expected, Reserve Bank of New Zealand Governor Alan Bollard reduced the overnight cash rate by 100 basis points to 6.5 percent, the most aggressive move in almost a decade. Citing lower growth forecasts, policy heads continue to see longer term slowdown as the New Zealand economy experiences recessionary conditions coupled by the highest rate of inflation in 18 years. Earlier this week, the consumer price index jumped an annualized 5.1 percent, greater than the central bank’s benchmark , as the economy experienced two consecutive quarters of contractionary growth. As a result, given the current economic downturn, further cuts in domestic rates are anticipated. New Zealand’s currency spiked on the news, turning higher after being beaten down for most of the day, now trading at 0.5927.
Tags: Governor Alan Bollard, New Zealand Dollar, Reserve Bank of New Zealand
About the Author - Richard Lee
Richard C. Lee is the Chief Currency Strategist for OnlineForexTrading.com. Employing both fundamental and technical models, Richard has previously been featured on DailyFX.com, Bloomberg, FX Street.com, Yahoo Finance and Trading Markets.com. In analyzing the markets, he draws from an extensive experience trading fixed income and spot currency markets in addition to previous bouts in options, futures and equities.
