{"id":144440,"date":"2019-03-26T15:35:30","date_gmt":"2019-03-26T19:35:30","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=144440"},"modified":"2019-03-26T11:22:41","modified_gmt":"2019-03-26T15:22:41","slug":"coming-up-new-zealand-interest-rate-decision","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/03\/coming-up-new-zealand-interest-rate-decision\/","title":{"rendered":"Coming Up: New Zealand Interest Rate Decision"},"content":{"rendered":"<div id=\"inves-1017481368\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">March 26, 2019<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p><strong>By <\/strong><a href=\"https:\/\/www.orbex.com\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Orbex<\/strong><\/a><\/p>\n<p>Interest rate decisions\u00a0are\u00a0routinely one of the major events that most affect currencies. But despite some of the press speculation, the consensus among analysts is that the RBNZ is likely to stay the course.<\/p>\n<p>Scrutiny will be on the policy statement from the decision. However, with little change expected, the kiwi could sail through with less volatility. Here\u2019s what could happen and why.<\/p>\n<h2><strong>Schedule and Expectations<\/strong><\/h2>\n<p>The interest rate decision is the only major macro event for the day likely to affect the NZD.\u00a0 The decision and the rate statement are set to be released concurrently on Thursday at 02:00 CET (which would be Wednesday at 21:00 EST). This is what is known as a \u201csmall\u201d meeting in that there is no press conference scheduled afterward.<\/p>\n<p>There is<strong>\u00a0a broad consensus that the rate will stay at 1.75%.\u00a0<\/strong>So, what we\u2019d be looking for is a change in the language and expectations in the statement. Here are a couple of key considerations:<\/p>\n<ul>\n<li>Last time, the governor said that the\u00a0<strong>next move could be either up or down.\u00a0<\/strong>If that is\u00a0<b>omitted<\/b><b>\u00a0<\/b>this time, it would be seen as\u00a0<b>a return to the prior upward bias.\u00a0<\/b>If it\u2019s changed, it would likely be to say that he expects the next move to be down. That will\u00a0logically\u00a0put the NZD under pressure.<\/li>\n<li>Regarding the outlook for GDP growth for the remainder of the year,\u00a0last time around<strong>\u00a0the RBNZ affirmed their outlook of 3.0% growth.\u00a0<\/strong>This year,\u00a0a revision to the downside would also be negative for the kiwi dollar. A\u00a0revision higher, on the other hand, would reflect the better data from the last quarter and be something of a surprise for the markets.<\/li>\n<\/ul>\n<h2><strong>There\u2019s No New Data<\/strong><\/h2>\n<p>Since the last meeting of the reserve bank, there has only been one top-tier macro data release, which was\u00a0<a href=\"https:\/\/www.orbex.com\/blog\/en\/2019\/03\/nzd-current-account-gdp\" target=\"_blank\" rel=\"noopener noreferrer\">GDP<\/a>. So, without a wealth of new evidence to sway the bank\u2019s view, there isn\u2019t much to cause speculation that there will be a change in policy.<\/p><div id=\"inves-1191589357\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>About that quarterly GDP data, though,<strong>\u00a0the first quarter grew by 0.6%<\/strong>, a doubling over the prior quarter. While this might sound good at first glance, it\u2019s\u00a0<strong>still below the 0.8% that the reserve bank had projected.<\/strong>Even though the market reacted positively, it might not be positive enough to sway the bank\u2019s outlook.<\/p>\n<p>Over the last several years, New Zealand\u2019s quarterly GDP has routinely come in at 0.9% growth with only brief drops. 0.6% was still below the near-term average.<\/p>\n<h2><strong>The Environment<\/strong><\/h2>\n<p>The weakness in the performance of the Kiwi economy is multifaceted but largely due to external factors. These include the restriction on sending money overseas from major economies like China (a primary source of infrastructure investment capital), Japan and the US. Broader weakness in the world economy can also be filtering through to the highly open economy.<\/p>\n<p>Some analysts speculated that the economic situation is such that last meeting, the reserve bank even discussed (if not almost proposed) a rate cut. This would mirror a change in the outlook seen by the RBA, with the two countries\u2019 economies largely attached by the hip. However, the argument against this notion is that economic data from NZ has mostly remained positive.<\/p>\n<h2><strong>It\u2019s About Trade<\/strong><\/h2>\n<p>The bottom line is that a primary way to stimulate an economy is by weakening the currency. And while the RBNZ is not mandated to promote economic growth, it is still a major concern. A lower exchange rate would help exporters and support inflation. With economic\u00a0<a href=\"https:\/\/www.orbex.com\/blog\/en\/2019\/03\/oecd-slashes-world-growth-forecasts\" target=\"_blank\" rel=\"noopener noreferrer\">underperformance around the world<\/a>\u00a0and talks of easing from the RBA,\u00a0<strong>if New Zealand doesn\u2019t adjust its outlook downwards, it will find itself in a dwindling minority.<\/strong><\/p>\n<p><strong>By <\/strong><a href=\"https:\/\/www.orbex.com\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Orbex<\/strong><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Orbex Interest rate decisions\u00a0are\u00a0routinely one of the major events that most affect currencies. But despite some of the press speculation, the consensus among analysts is that the RBNZ is likely to stay the course. Scrutiny will be on the policy statement from the decision. However, with little change expected, the kiwi could sail through [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-144440","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/144440","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=144440"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/144440\/revisions"}],"predecessor-version":[{"id":144446,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/144440\/revisions\/144446"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=144440"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=144440"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=144440"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}