Just scrolling through the overnight news (still) and I came across this headline:
Kiwi swoons as rate-cut expectations grow
Yes, I actually did do a double take! It was a real “Do my eyes deceive me?” moment …
Anyway … so I clicked on it … and it had been watered down (just a little bit) to: Kiwi swoons as rate-rise reversal bets grow
Its from the Financial Times, in the Fast FT section (subscription required for Fast FT … well worth it IMO):
- Speculation that New Zealand’s central bank will reverse its strategy of raising interest rates is clipping the kiwi’s wings.
- data that suggested the nation’s property market is finally slowing (I had the headline yesterday, here: New Zealand July residential house price index -0.7% m/m and +5.9% y/y)
- New Zealand dollar has been a popular purchase … after (the RBNZ hiked rates) four times this year… Governor Graeme Wheeler has signalled he will take a wait and see approach on further rate rises, however.
FWIW … The Reserve Bank of New Zealand will not be cutting rates any time soon. Part of the rationale for the rate hikes has been ‘normalizing’ of the cash rate. The hikes are now on pause (market consensus is for the next hike in December, though March 2015 is becoming increasingly popular). But rate cuts? No.