Uncertain times for the Kiwi ahead of RBNZ meeting

Economic growth can be a double edged sword as higher growth can lead to higher inflation rates and in turn higher interest rates. All eyes will be watching the market at 9:30am to see who fortune will favour.

 
 

LOCAL Inflation data rocked the market last week sparking fears that the Reserve Bank of New Zealand (RBNZ) will hike the interest rate. The fourth quarter year on year CPI data recorded a 2 year high coming in at 1.6%. The RBNZ aims to keep inflation within the 1-3% band in the hope to fuel economic growth while not allowing inflation to cripple the economy.  If the RBNZ fears that the inflation rate will accelerate quickly towards the 3% upper band they are likely to increase interest rates in an attempt to damped consumer spending.  The RBNZ is set to meet at 8pm GMT on Wednesday Evening and is likely to give clarity on if and when the interest rate is likely to rise.

Today will see the UK GDP data released for the fourth quarter of 2013, with economist predicting a 2.8% growth rate. The Pound has been extremely Bullish in the market lately and positive news today is likely to see its dominance continued. Economic growth can be a double edged sword as higher growth can lead to higher inflation rates and in turn higher interest rates. All eyes will be watching the market at 9:30am to see who fortune will favour.

GBP / NZD : 2.003

EUR / NZD : 1.648

USD / NZD : 1.206

AUD / NZD : 1.060

Exchange rates as of 08:39 (GMT), 28 January 2014

Note: The above exchange rates are based on “interbank” rates.

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