WELLINGTON - New Zealand’s central bank stunned markets on Wednesday by cutting interest rates a steep 50 basis points and even flagged the risk of going nuclear by taking rates below zero, a radical shift that drove its currency to three-and-a-half year lows.
“It is easily within the realms of possibility that we might have to use negative interest rates,” RBNZ Governor Adrian Orr told a news conference after its policy meeting. The committee drove home its dovish message by predicting there was no chance of a hike until late 2021, a lower for longer outlook that was also recently adopted by the Reserve Bank of Australia .
Growth in New Zealand’s near $200 billion economy has been running below-par in recent quarters as international trade frictions slowed global demand in a blow to factory activity and exports. Business and consumer confidence have also sunk, painting a gloomy outlook.Policymakers everywhere have been forced to consider more stimulus as fears grow over the broadening fallout of the U.S.-China trade dispute on the global economy.
Investors this week feared Beijing had opened a new front in the currency conflict by allowing its yuan to weaken past 7.0000 per dollar, pressuring competitors to follow suit. Those fears were underscored after Washington labeled China a currency manipulator in a dramatic escalation of the trade dispute between the world's biggest economies.
Its the Ardern rot factor. Expect disaster after disaster from this defunct creature. The Mauris will eventually crack out their muzzle loading muskets and shoo her out back to Israel.
2009 is returning
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