The New Zealand Treasury's Economic Update issued late last week showed that there is no near-term turning point seen for the economy and the consensus expects the Reserve Bank of New Zealand to hold interest rate on Wednesday. Key quotes “Weak housing market, lower food pricesandexpected inflation highlight low demand.” “No turning point in sight amid lower retail spending and sector-wide business activity.
High dairy prices boost export income, contributing positively to the economy and thus to the NZD. How do decisions of the RBNZ impact the New Zealand Dollar? The Reserve Bank of New Zealand aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates.