Article by ForexTime
The Reserve Bank of New Zealand was surprisingly dovish on Thursday after it indicated to the markets that it was willing to cut interest rates.
The New Zealand central bank held a monetary policy meeting today and announced its decision to leave the overnight cash rate (OCR) unchanged at 3.5%. This was expected but its reiteration about high exchange rate and the likelihood of deflation pushed the kiwi to a four-year low. It cited plunging oil prices are dampening inflation globally.
“In the current circumstances, we expect to keep the OCR on hold for some time,” RBNZ Governor Graeme Wheeler said.
“Future interest-rate adjustments, either up or down, will depend on the emerging flow of economic data,” Wheeler commented.
The NZD/USD fell to 0.7317 from 0.7451, a 1.9% drop from the previous close of 0.7457. At the lowest on Thursday, the NZ dollar was at its weakest since March 2011.
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