Tomorrow at 21h, the central bank of New Zealand will release its monetary policy decision for the month of may. To help you optimize the event on the foreign exchange market and reap the pips, here’s what you need to know.
That happened last march ?
Last march, the governor Wheeler has kept interest rates at 1.75%, as expected. To recall, he had reduced in November to a record level.
In his declaration, he noted that the GDP in the fourth quarter of 2016 was weaker than expected because of temporary factors. As there was no press conference after the meeting, nobody really knew what were these temporary factors.
The issue of inflation was also raised. According to the RBNZ, consumer prices should be variable over the next twelve months, due to one-time effects, but they should eventually reach the target in the medium term.
The central bank of New Zealand has recognised that the exchange rate-weighted dollar NZD had fallen by 4% since February but it has also stressed that a greater impairment was necessary to achieve a more balanced growth.
All in all, everything indicates that the RBNZ will maintain its bias accomodating for a good time, even if many uncertainties hanging (position protectionist Trump, brexit, China debt, etc).
No change expected but…
The players in the foreign exchange market does not expect that the RBNZ operates to change this time. This does not mean that the statement of rates of the central bank of new zealand will be a non-event.
With the last statement, we know that New Zealand is closely monitoring many indicators of global macroeconomic such as GDP, the inflation of the economy, one relative to the housing, and the weighted index of the dollar NZD. And well note that they have all improved since the march meeting.
This being said, the central bank of new zealand remains concerned about several things. The prices of raw materials have fallen in recent time, which could adversely affect the overall inflation of the economy and support the belief of the RBNZ according to which the CPI will be variable for the year to come. Lower prices could weigh on exporters such as Australia and China are its major trading partners. The future of Britain and the outbreak of the brexit as well as the impulses of protectionism raised by the president of the United States, are also concerned about a few officials of the central bank of New Zealand.
Overall, analysts expect the RBNZ to be in balance. It should, therefore, recognise improvements and set aside a new rate increase for some time yet.
The dollar NZD will it be volatile ?
Last march, the statement from the RBNZ was not good enough for the bears to dollar NZD or quite hawkish for the bulls, then the currency of new zealand was to fluctuate throughout the day.
If the RBNZ to strike a fair balance, as had been the case in march, between optimism and sweetness then the dollar NZD could go up.
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