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RBNZ rate announcement slams NZD

Posted by Akhilesh Ganti on Mar 13, 2013 4:47:00 PM

New Zealand's Reserve Bank (RBNZ) left the Official Cash Rate (OCR) unchanged at a record low of 2.5 percent. Here are the main points of Reserve Bank Governor Graeme Wheelers' statement:

  • plans to keep the OCR at this level until the end of the year. 

  • economic recovery is uneven - demand and production is expanding but the labor market remains weak.

  • housing investment is rising, along with business and consumer confidence.

  • warned about rising house prices saying he didn't want to see that spill over into higher inflation.

  • noted the overvalued New Zealand dollar is undermining profitability in the export and import sectors.

The Kiwi plummeted about a 100 pips on these statements especially the comments about the negative effects of a strong currency and the desire, almost a promise, to keep rates steady for the rest of the year. 

NZ OCR Mar14

(chart: Bloomberg)

 

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