The Reserve Bank of New Zealand (RBNZ) holds its first regular meeting of the year on Wednesday. The economists of Commerzbank analyze how the decision could affect the NZD.
Will the RBNZ lower its forecasts?
Expectations seem to have calmed down a bit. Both the Bloomberg consensus and markets expect rates to remain unchanged. At the beginning of the month things seemed different. After a major local bank revised its RBNZ forecast towards further rises, almost one more rise was expected.
The decision should be interesting, regardless of the monetary policy rate. The RBNZ will report on its quarterly monetary policy report, which will include new forecasts and the expected path of interest rates. There will also be a press conference to discuss the new projections.
As inflation appears to be falling, the RBNZ could lower interest rate path slightly. The deciding factor will likely be the extent to which it revises its interest rate and inflation forecasts downward. However, given that it has been quite cautious in recent quarters and is unlikely to give the go-ahead after a single quarter of better inflation, the correction is likely to be small. If so, the New Zealand dollar could benefit somewhat from the decision.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
