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The RBNZ leaves the cash rate unchanged as expected.

Written by Sam Coxhead on April 26th, 2012.      0 comments

9:22 AM (NZT) As completely expected, the RBNZ have left the cash rate unchanged at the historically low rate of 2.50%. In their very short statement they acknowledged domestic signs of recovery, but again point to a fragile global outlook. With no change on the cards ahead of Dr Bollard’s finish as Governor in September, he took an clear opportunity to pay lip service to the stubbornly high NZ dollar.
 
“The New Zealand dollar has stayed elevated despite recent falls in commodity prices. Should the exchange rate remain strong without anything else changing, the Bank would need to reassess the outlook for monetary policy settings.”
 
The NZD has lagged in performance in the last 48hours as the RBNZ meeting approached. It certainly presented itself as a good opportunity for the central bank to pay lip service the cause for a lower NZD, and the market pricing acknowledged this to some extent. Ironically this fact has seen the NZD rally since the statement, as investors with sold positions quickly cover positions.
 
In overnight action the FED offered a similar statement to their one in March as they left monetary policy unchanged. They have marginally upgraded the 2012 growth expectations to the 2.4-2.9% range from 2.2-2.7% previously, but projections for 2013-2014 are slightly lower. They maintain their pledge to keep rates exceptionally low through to 2014, and remain prepared to do more to support growth if needed.
 
Equity markets were higher in the US driven by a 10% rally in Apple shares following their earnings report(they have been under considerable pressure over the last week).  Boeing and Caterpillar also beat expectations, which added further to the somewhat positive sentiment.
 
The preliminary GDP numbers in the UK point towards a return to technical recession as a second quarter of negative growth was recorded. The -.2% number saw the GBP give up a small portion of the significant gains it has seen over the previous week or so.
 
          Past 24 hours
  Current level Pre-RBNZ  % Chge since RBNZ   Low High
NZD/USD 0.8165 0.8131 0.42%   0.8115 0.8165
AUD/USD 1.0365 1.0353 0.12%   1.0287 1.0365
NZD/AUD 0.7877 0.7855 0.28%   0.7846 0.7886
AUD/NZD 1.2695 1.2731 -0.28%   1.2681 1.2745
NZD/GBP 0.5050 0.5032 0.36%   0.5017 0.5061
NZD/EUR 0.6177 0.6155 0.36%   0.6136 0.6177
NZD/YEN 66.40 66.15 0.38%   65.82 66.40
NZD/CAD 0.8030 0.8000 0.37%   0.7980 0.8030
 

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