BREAKING: The RBNZ Stuns Markets with a 50bp Rate Cut
Rowan Crosby • 1 min read
The RBNZ has smashed expectations and come out with a huge 50bp rate cut. That takes the OCR to 1.0% down from 1.5%, in what was a huge shock.
Markets had been pricing in a 25bp cut for some time and the move was all but a certainty, but it’s fair to say that a 50bp cut was very much unexpected.
The move has hit the NZD/USD hard as you would think it might and it is now trading below 0.6500, down 1% on the session.
While the RBNZ might have been working towards lower rates, this doesn’t leave them with all that much wiggle room for further cuts. There has been increased pressure from other central banks who have been also cutting rates, such as the FOMC and RBA. Clearly, there is a degree of both pre-empting any downturn and also trying to compete with the other central banks.
Governor Ore will be speaking in the next hour and there is now a massive focus on what he has to say. Both in regards to today’s massive cut and also what he thinks will be happening going forward for the NZ economy.
This is a sign of weakness and this might follow-through for a few days here with more weakness in the Kiwi.
Like I said, a huge surprise here today, with not many predicting this one. The focus now turns to 0.6400/50 to see if those levels hold for the time being.