New Zealand dollar gains before OCR review, Fed sees moderate growth

Thursday 26th April 2012

The New Zealand dollar rose ahead of the central bank’s review of interest rates and after the Federal Reserve said it saw “moderate” growth in the US economy, though with downside global risks.

The New Zealand dollar rose to 81.34 US cents from 81.15 cents late yesterday. The trade-weighted index rose to 72.44 from 72.35.

Reserve Bank Governor Alan Bollard will keep the official cash rate at a record low 2.5 percent when he releases the review at 9am, according to all economists polled by Reuters. He may predict a more benign track for monetary policy given tame inflation and tepid economic growth, economists say.

“Key to the RBNZ meeting today will be any comments related to the recent downtick in NZ inflation,” said Kymberly Martin, a strategist at Bank of New Zealand. “We will also be interested to see if the NZD remains centre stage in the RBNZ statement.”

In the US, the Federal Open Market Committee said it expects “economic growth to remain moderate over coming quarters and then to pick up gradually.

The US housing market “remains depressed” and that “strains in global financial markets continue to pose significant downside risks to the economic outlook,” the FOMC said in a statement today at the end of a two-day meeting.

The New Zealand dollar fell to 78.52 Australian cents from 78.64 cents and rose to 66.14 yen from 66.06 yen.

The kiwi rose to 61.56 euro cents from 61.48 cents and rose to 50.33 British pence from 50.23 pence.

(BusinessDesk)

BusinessDesk.co.nz

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