Orbex, NZ held Interest Rate unchanged & Expecting Inflation to be lower for long
Reserve Bank of New Zealand reveals its stance to the economy last week.
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Equity markets saw a volatile week as the major stock indexes in the U.S. fell sharply sparking a selloff.
However, the selling was subdued by mid-week as the stock indexes managed to stabilize.
The U.S. government passed the budget bill to fund the government for the next two years.
The U.S. dollar saw a positive week as the currency managed to rebound.
RBNZ holds rates steady. Weak inflation a concern
The Reserve Bank of New Zealand held its monetary policy meeting last week. As widely expected, the RBNZ held the overnight cash rate unchanged at 1.75%.
The central bank maintained its statement unchanged as the markets expect the central bank to hold rates steady at the current levels for longer.
In the monetary policy meeting, the RBNZ said that it expects inflation to be lower for longer.
The RBNZ’s decision saw the Kiwi dollar declining. Some economists were expecting the potential for a hawkish forward guidance from the central bank.
“Annual CPI inflation in December was lower than expected at 1.6%, due to weakness in manufactured goods prices,”
the RBNZ said in its post meeting statement.
The central bank added that longer term inflation expectations were anchored at 2%.
The RBNZ also downgraded its forecasts. 2018 GDP is expected to average 0.8% while inflation is expected to rise to 1.8% by the end of this year.
The OCR is expected to rise to 1.90% for the same period.