The Reserve Bank of New Zealand cut its official cash interest rate by an additional 25 basis points to 2.50% amid low global growth and inflation conditions. The RBNZ has moved to ease policy multiple times since June with the latest cut occurring October 28th in response to weak dairy prices and soft domestic inflation. RBNZ Governor Graeme Wheeler has indicated that further reduction in the cash rate would probably be necessary to counteract falling commodity prices, global uncertainty and to help bring inflation back towards the longer-term objective. He also remarked that global dairy prices had recovered recently along with other areas of the economy such as the services sector and construction which remain robust. However concerns still remain regarding the weak growth occurring in China and how it will impact the global economy. The New Zealand dollar surged on the announcement, with NZDUSD rising as high as 0.6781 before pulling back.
New Zealand Slashes Rates
Daily Analysis - 10/12/2015