Trade Desk Thoughts - New Zealand Official Cash Rate

New Zealand Official Cash Rate Actual 7.50%, Expected 7.75%, Previous 8.00%

Release Explanation: The RBNZ is known for its clarity regarding monetary policy intentions, thus the result is usually foreseen in advance. However, this time the RBNZ surprisingly cute rate 50 basis points. The decision aligns with the Reserve Bank of New Zealand's monetary policy to spur or slow economic growth or affect the exchange rate. The RBNZ typically like to maintain an inflationary target of 1-3 percent and will change rates to keep it within such a range.

Trade Desk Thoughts: New Zealand's central bank cut its interest rates today by a half point to 7.5 percent, a move that was a surprise to most economists. 'The New Zealand economy is experiencing a marked slowdown,' said RBNZ Governor Alan Bollard in an accompanying statement. 'While domestic activity is likely to pick up late this year as a result of personal tax cuts, increased government spending and rising rural incomes, we expect a prolonged period of household sector adjustment and below-average growth.' This is the second straight meeting that the RBNZ has lowered their rates. In July, the rate was decreased by 25 basis points.

Forex Technical Reaction: Typically with such a surprise cut there is a tendency for the news to spill over to Australia; there was a spike of about 60 pips seen on the Aussie. The Kiwi on the other hand has fallen over 90 pips in response

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