The Central Bank of New Zealand is pleased with what has been achieved and what investors need to know is that the neutral position on interest rates manages to anchor inflation to "healthy" for the economy 2%.
RBNZ left interest rates unchanged at 1.75%, and John McDermott, a banker, said the Monetary Policy Committee is not considering a change in monetary policy unless inflation goes out of control, dropping or rising too much.
Given the global trends of extremely low inflation, the rise in a well-growing economy like New Zealand is frivolous to talk. In this regard, RBNZ reduced its inflation forecast for 2018, expecting it to fall to 1.3%, and in 2019, to begin to rise.
NZD noted the bank's decision negatively, marking a decline of 0.40%. Given the neutral position of RBNZ and Hawkish's moods in the Fed, we expect NZD/USD to reflect the strongest differences in the policies of the two banks. The temporary fall in the stock market has led to a lower risk appetite and a decrease in the raw materials from which the New Zealand economy is directly dependent. This has a very negative impact on the NZD, but after the stock market correction and the subsequent NZD growth, we will be able to position ourselves with short NZD and minimal risk.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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