Reserve Bank of New Zealand likely to keep rates on hold in September, likely to ease in months ahead

The Reserve Bank of New Zealand is set to meet tomorrow for its interest rate decision. During its last meeting, the central bank had surprisingly lowered its interest rate by 50 basis points. The RBNZ’s accompanying guidance was dovish as well, as RBNZ Governor Orr had stated that it was “easily within the realms of possibility” that the central bank might employ negative interest rates. The central bank’s current Official Cash Rate of 1 percent is not too far from zero, but the guidance nevertheless sent a solid dovish signal, noted Wells Fargo in a research report.

Analysts anticipate that the New Zealand’s central bank is expected to hold rates stable at 1 percent tomorrow, but markets are expecting a further easing from the RBNZ in the months ahead. In that regard, even if RBNZ opts to leave rates on hold tomorrow, it would be significant to watch whether it hints at further rate cuts ahead, said Wells Fargo.