NZD/USD: Interest Rate Decision by RCNZ will be Known Today

NZD/USD: Interest Rate Decision by RCNZ will be Known Today

Majority of economists believe that RBNZ will leave interest rate unchanged at the level of 2.25%. Today, at 23:00 (GMT+2) will announce its interest rate decision.

Last month the Central Bank unexpectedly lowered interest rate, which caused the decline in the NZD on the currency market. A chance of the further decline is 34%. Most likely, RBNZ will reduce the rate at the meeting in June and in today’s comments the Bank may indicate intention to continue monetary policy easing.

Currently, annual inflation is 0.4%, which is far lower that the target level of 1%-3%. Lately, world central banks use the reduction of the basic interest rate as a main tool of monetary policy easing in order to support national economies and accelerate inflation. RBNZ has “the room for manoeuvre”. Key interest rate of the New Zealand is 2.25%, which is one of the highest in the world. The restricting factor for the decline in the interest rate is the oversupply in the real estate market of New Zealand.

However, RBNZ may take this step. If it does not happen today, the bank can do it in June. According to the data presented today, deficit of the foreign trade in the country amounted to 3.838 million NZD, which was the highest level since April 2009. Balance of foreign trade in March amounted to 117 million NZD долларов (against the forecast of 405 million and 367 million a month earlier).

Prior to the release of the 3,838 interest rate decisions by RBNZ at 20:00 (GMT+2), the US Fed will announce its interest rate decisions. Later, US Fed will give comments on this issue. Therefore, before making trading decisions, keep in mind that from 20:00 to 23:00 volatility in the pair NZD/USD may be very high.