RBNZ Slashes Rates by the Most On Record to 6.50%
RBNZ Slashes Rates by the Most On Record to 6.50%
The New Zealand dollar is trading choppily above key support back as the Reserve Bank of New Zealand slashed their Overnight Cash Rate (OCR) target by 100bps to 6.50 percent, which is the sharpest cut since the OCR was introduced in March 1999.
While inflation measures remain very high, the New Zealand economy has already officially fallen into recession as GDP contracted for two consecutive quarters (-0.3 percent in Q1, -0.2 percent in Q2). Furthermore, the credit crisis taking a harsh toll on New Zealand’s financial markets, while the global economic slowdown threatens to hurt the nation’s crucial export sector.
Looking at the RBNZ’s subsequent press release, RBNZ Governor Bollard said that he expects rates will be lowered further as growth is anticipated to miss forecasts amidst a drop in demand for exports and a contraction in consumer and business spending.
DailyFX
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