RBNZ Dollar decision

The Reserve Bank of New Zealand (RBNZ) is still anticipated to leave the Official Cash Rate target unchanged for the fourth straight meeting at 2.50 percent. In RBNZ Governor Alan Bollard's last policy statement on September 10, he sounded extremely cautious on the outlook for the economy, especially because the strength of the New Zealand dollar had created additional risks. Where the New Zealand dollar ends the trading day will likely have to do with the status of one statement though: the final portion. We also saw in the last policy statement that the RBNZ maintained that it was “appropriate to continue to provide substantial monetary policy stimulus to the economy” and that they “continue to expect to keep the OCR at or below the current level through until the latter part of 2010.” However, the RBNZ announced on October 14 that it would begin "removing and consolidating some of the temporary emergency liquidity facilities put in place during the financial crisis in 2008" as conditions had improved significantly, suggesting potential for a more hawkish tone. Overall, if the RBNZ eliminates the phrase noting that they could still lower rates, the New Zealand dollar is likely to surge in anticipation of rate hikes down the line. On the other hand, if the RBNZ maintains their dovish-neutral tone, the currency could dive as interest rate expectations would take a hit.