In the early hours of the morning the reserve Bank of New Zealand (RBNZ) chose to go one further than their Australian neighbours and cut the interest rate. The RBNZ have taken the rate down to 1.5% which is the same as Australia’s but makes them one of the first western nations to cut rates in a few years.
Currency Pair | % Change (Month) | Difference on £200,000 | |
---|---|---|---|
![]() | ![]() | 2.02% | NZD $7,900 |
Currently employment in New Zealand is at a maximum sustainable level, however there is subdued forecasts for the near future encouraging the RBNZ to act before it can’t make an impact. The fact the interest rate was at 1.75% with only the US in the western world with higher rates means the bank could act with minimal consequences. It is worth noting however that this is the record low for interest rates in New Zealand.
The Central Bank in the accompanying statement to the interest rate decision didn’t give much away as to what they plan to do next. If there aren’t the changes in the economy, then there could always be the prospect of a further cut. They try to stay close the Australian rate and as the Reserve Bank of Australia (RBA) look set to cut rates soon, the writing might be on the wall for New Zealand.
In the last week the GBP/NZD interbank rate has climbed nearly 5 cents with the rate currently residing just under the 2.00 level. The rate did touch the 2.00 level in the early hours of Wednesday morning. The rate was last at this level in October 2018, albeit for only a few weeks so those looking to purchase NZ dollars could well be capitalising on an eighth month high. Before that point you have to go as far back as pre-referendum levels in June 2016 for the GBP/NZD interbank rate above 2.00.
Alternatively, if you’re looking to sell New Zealand dollars you may wish to consider your position as there is no certainity that the rate will not climb further. A positive day for sterling following any Brexit developments and current levels could result in this.