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New Zealand Cash Rate will define the fate of NZD!

New Zealand Cash Rate will define the fate of NZD!

Updated

New Zealand Cash Rate will define the fate of NZD!

Reserve Bank of New Zealand (RBNZ) will reveal Official Cash Rate and make a statement about monetary policy on October 6, 04:00 GMT+3. 

What will happen?

Reserve Bank of New Zealand (RBNZ) will reveal Official Cash Rate and make a statement about monetary policy on October 6, 04:00 GMT+3. The statement contains the outcome of RZNB's decision on interest rates and commentary about the economic conditions that influenced it. Also, it discusses the economic outlook and offers clues on the outcome of future decisions.

Why is it important?

While the rate decision is usually priced into the market, it tends to be overshadowed by the RBNZ Rate Statement, which is focused on the future. The Reserve Bank is widely expected to raise the Official Cash Rate to 0.5% from the current 0.25% next week. When there is a typical amount of uncertainty, and the risks are evenly balanced, then central banks globally tend to follow a smoother path and keep their policy rate unchanged or move in 25 basis point increments.

On August 18, 2021, RBNZ didn’t raise the rate as expected and has kept it at 0.25%. Such a decision was the reason for the NZD to plunge.

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How to trade on the RBNZ statement?

The interest rate is expected to rise, and more hawkish comments from the Reserve Bank will help New Zealand dollar to strengthen, especially against currencies of more dovish countries.

  • If the statement is more hawkish than expected – NZD will rise.
  • Otherwise, fall.

Check the economic calendar

 

Instruments to trade: NZD/CAD, NZD/JPY, NZD/USD.

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