4th rate cut this year from RBNZ

Dec 11, 10:20 am
rate RBNZ

Wednesday marked the release of China’s consumer prices for the month of November. Numbers came out higher than expected at 1.5% yoy (year-on-year), with a forecast of 1.4% and a previous recorded 1.3% yoy growth in October. The new information’s impact was mainly seen in the hike of healthcare demand, in the transportation services and in the personal activities niche. PPI (Producer Price Index) remained at -5.9% yoy for the month of November, a little over the -6.0% yoy expectation.

The RBNZ (Reserve Bank of New Zeeland) also announced on Wednesday their decision to cut the OCR (Official Cash Rate) for the 4th time this year, bringing it from 2.75% to 2.50%.

In their statements, the bank officials made a remark regarding a further possible rate cut this year if warranted, but most likely not possible due to the economic development – thing that offered the bulls more than enough maneuver space, but the main idea was that they expect to achieve the inflation goal with the current rate setting. RBNZ also said that the NZD’s depreciation is well regarded as support for a sustainable growth pace.

Thursday came with a set of new data across some important markets.
The first one worth mentioning is Australia’s employment figure released by the ABS (Australian Bureau of Statistic) which surprised markets for the good in November, the unemployment rate going down 0.1 basis points to reach May 2014’s level at 5.8%, with a previous 5.9% in October. Predictions were of a tick toward the other side to reach 6.0%.

Also on Thursday, SNB (Swiss National Bank) stated their decision to stick to the current monetary policy. The targeted 3-month LIBOR is maintained between -1.25% and -0.25%, the on-sight deposit interest rate with SNB remains -0.75%.

BoE’s (Bank of England) release was also at par with market expectations, their statement announcing an unchanged rate at 0.5%. The vote was yet again as expected, 8-1 for keeping the rates unchanged. The UK policy gravitates around the inflation outlook, headline inflation being expected to stay below 1% in the first half of 2016, but the 2-year perspective brings it around 2% as cost pressures need to firm substantially.

Crude prices reverted their gain, dragging the WTI (West Texas Intermediate) barrel back to the mid $36.00s. Yesterday’s good tone in the greenback coupled with the already heavy sentiment around the oil prices managed to push the spot back to fresh 7-year lows in the early trade.

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