NZD/USD drops after the RBNZ statement – hints of a closer rate cut

The statement is here:

• RBNZ leaves it cash rate on hold at 5.5%, as expected

The part I highlighted is this:

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• Committee expecting headline inflation to return to within the 1 to 3 percent target range in the second half of this year

If that’s the case why wouldn’t we expect a rate cut soon? I think the RBNZ agree, judging by this:

• The Committee agreed that monetary policy will need to remain restrictive. The extent of this restraint will be tempered over time consistent with the expected decline in inflation pressures.

The easy to read version would be ‘if inflation goes down, rates go down’.

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Signalling a rate cut they are. NZD/USD lower:

This article was written by Eamonn Sheridan at www.forexlive.com.