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RBNZ Cuts OCR to 1.50%

Published May 9, 2019

The Kiwi Dollar opens lower this morning as the RBNZ cut the official cash rate by 0.25% to 1.50% yesterday. Trading overnight in the NZD was fairly well contained with the currency staying within a fairly tight range. It looks as though yesterdays rate cut was largely priced in by the market which has capped any further losses. Most NZD cross rates are lower this morning, although the NZD/AUD has remained flat with the Australian Dollar continuing to struggle below the 70 cent mark.

RBNZ Indicates Concern Over Global Growth

Yesterday’s rate cut by the RBNZ was the first in over 2 years, with Governor Orr commenting that a lower OCR was necessary to support employment and inflation policy. The committee was also concerned about the risk of a larger than anticipated slowdown in global economic growth, particularly in Australia and China. While the bank was not overly dovish in its comments, it has indicated the potential for one more cut in the current cycle.

Trade Talks Continue

Outside of the RBNZ decision, the other big news has been the ongoing US-China trade war. Chinese state media have recently reported that the nation has full assurance that the recent challenges between the US and China can be overcome. This comes as trade negotiations with the US are set to take place tomorrow in Washington. Focus will be on whether the US will follow through on threats to implement tariffs on Friday.