​RBNZ Rate Decision Buoys NZD/USD

WikiFX News (12 Nov.) - On Wednesday, the Reserve Bank of New Zealand (RBNZ) announced its rate decision for November, which held the official cash rate at 0.25%, as expected. The prices of NZD/USD grew to $0.6904 following the decision, refreshing a new high of more than a year and a half.

The RBNZ stated on Wednesday that in order to bolster the economy, policymakers all decided to launch a new Funding for Lending Programme in December. The RBNZ held the benchmark interest rate at a record low of 0.25% as expected and retained the large scale asset purchase programme at NZ$100 billion ($68 billion), which boosted the New Zealand dollar.

However, the bank reiterated that it was prepared to provide additional support such as negative rates if necessary. It also projected that the economy would slip back into recession in the Q4 of 2020 as inflation and employment would remain below the remit targets for a persistent period.

New Zealand's Covid-19 containment efforts are successful. Currently, the country's economy has seen a strong recovery and its property prices have risen sharply, thus expectations for negative rates may dwindle, further swelling the New Zealand dollar.

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Chart: Trend of NZD/USD