RBNZ will again act, if kiwi appreciates further

RBNZ once again cut its key rate by 25bp to bring it to 2.5%, as indicated in the last rate meeting. This is primarily because of the NZD which rose again in the month of August.

The central bank still wants to a weak NZD, in order to support the economy. It is hence reserved its right to cut rates again, if this becomes necessary.

Else it is of the view that the level of rates reached now will be enough for it to achieve its inflation target, which means that RBNZ now took a neutral approach and the rate trough is reached.

"Now the kiwi must not appreciate any further as the RBNZ will otherwise take action again. This means that next time round it is somehow also up to the FX market to decide about the key rate...levels above 0.68 in NZD-USD are clearly selling levels", says Commerzbank in a research note