News and Market Analysis

RBNZ Flat lines on interest rates

After only four new cases of coronavirus, New Zealand is going into lockdown again today. Prime Minister Jacinda Ardern announced Auckland would return to stage three restrictions for three days starting Wednesday after its 100 day streak of not a single single recorded case was broken. The fear comes not in the fact there are new cases, but that they have no known source. There has been no connection to overseas travel, so there is increased urgency to find the source of the infection.

So what for our cousins across the Tasman? Although the lockdown is only a short one for now, New Zealand is still feeling the hangover of the previous outbreak. The Reserve Bank of New Zealand might do well at looking at their “mates” in Australia and see how the Reserve Bank of Australia handled the economic fallout due to the rise in cases in Melbourne.

Though the expectation is to leave interest rates where they are and look at boosting its bond-buying scheme, Adrian Orr, Governor of the RBNZ has hinted of dropping interest below 0% which will be detrimental to the NZD.

But all eye will be on the Monetary Policy Statement. Trader are looking into forecasts for growth and inflation to guide them on which direction the NZD is set to take.

With all that said, many global factors will also play their part in which direction the Kiwi decides to go. But one things for sure, nothing seems to keep this nation down and they keep coming up with the goods. So stay tuned folks, this is going to be an interesting day.