Kiwi gains as OCR unchanged in 'less dovish' review
The domestic economy is expected “to grow modestly over the next few years”, Reserve Bank governor Alan Bollard says
BUSINESSDESK: The New Zealand dollar rose against the greenback after the central bank kept the official cash rate unchanged as expected and stuck to its view from last month’s monetary policy statement, even after more benign inflation data.
The kiwi rose to 79.05 US cents after the Reserve Bank statement, from 78.88 cents immediately before and from 78.31 cents at 5pm yesterday. The trade weighted index rose to 71.71 from 71.54 before the statement and from 71.26 yesterday.
Underlying annual inflation “is expected to settle near the mid-point of the target range over the medium term”, governor Alan Bollard said. The domestic economy is expected “to grow modestly over the next few years”.
Figures last week showed annual inflation fell to 1% in the second quarter, at the bottom end of the bank’s 1% to 3% target range.
“The result was a slightly less dovish slant than we or the markets were expecting,” said Dominick Stephens, chief economist at Westpac Banking Corp. “This statement is therefore slightly positive for the NZD and NZ swap yields. NZD/USD could extend last night's rally further to 0.7930 on this.”
The kiwi gained overnight from a slight improvement in risk appetite after European Central Bank council member Ewald Nowotny argued the region’s rescue fund should get a banking license.
It gained against the pound as figures showed the UK economy shrank 0.7% in the second quarter, more than three times the expected contract.
The local dollar gained to 50.97 British pence from 50.45 pence yesterday and was little changed at 76.48 Australian cents.
The local currency gained to 61.63 yen from 61.21 yen and rose to 64.90 euro cents from 64.83 cents.
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Kiwi gains as OCR unchanged in 'less dovish' review
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