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RBNZ leaves the cash rate unchanged, but removal of March emergency cut to come.

Written by Sam Coxhead on July 28th, 2011.      0 comments

9:25AM (NZT) The RBNZ just left the cash rate unchanged at 2.50% as expected. Their brief statement is copied below. The last paragraph is the pivotal statement as usual.
They will be removing the “insurance” 50pt cut in the coming months, provided that current global financial risks recede. They acknowledge the high value of the NZ dollar will be impacting the economy. And if this persists it will reduce the need for further rate hikes in the short term.
To my mind this indicates that they will hike by 50pts by the end of the year, and are trying not to add further fuel to the NZD fire in the meantime. This is a steady approach from Gov. Bollard, and in the course of taking out the emergency 50pts of easing they will have time to assess conditions going forward.
The NZD rallied a little initially, but quickly reversed its small gains to be relatively unchanged.
The volatility continued in offshore markets with no news from the US as the Republicans now start to argue amongst themselves apparently.
In Europe the details of the Greek bailout package are emerging and the reading is a little grim,. Major bond principle reductions for investors and the credit ratings have downgraded Greece again, Euro weaker on the back of it.
Uncertainty to continue in the coming weeks.
          Past 24 hours
  Current level Pre-RBNZ  % Chge RBNZ   Low High
NZD/USD 0.8710 0.8694 0.18%   0.868 0.8766
AUD/USD 1.1029 1.1024 0.05%   1.0939 1.1080
NZD/AUD 0.7900 0.7894 0.08%   0.7886 0.7963
AUD/NZD 1.2658 1.2668 -0.08%   1.2558 1.2681
NZD/GBP 0.5333 0.5330 0.06%   0.5303 0.5344
NZD/EUR 0.6062 0.6058 0.07%   0.6003 0.6062
NZD/YEN 67.90 67.85 0.07%   67.73 68.22
NZD/CAD 0.8272 0.8265 0.08%   0.8220 0.8269