After a bullish reaction to an adjustment to the Reserve Bank of New Zealand’s mandate, the Kiwi fell at the end of the week as risk assets fell thanks to rapidly rising bond yields.
New Zealand Headlines and Economic data
Wednesday:
RBNZ kept rates on hold at 0.25% as expected
“The initiation of global COVID-19 vaccination programmes is positive for future health and economic activity. The Committee agreed, however, that there remains a significant period before widespread immunity is achieved. In the meantime, economic uncertainty will remain heightened as international border restrictions continue.”
“The Committee agreed that inflation and employment would likely remain below its Remit targets over the medium term in the absence of prolonged monetary stimulus.”
RBNZ policymakers agree that prolonged stimulus is necessary until targets are met
Thursday:
New Zealand government forces central bank to include housing in rate setting
This is a change that “may restrict its ability to run loose monetary policy.”
RBNZ governor says inflation target needs to be met before tightening
“Orr said RBNZ wants to ensure the economy does not get into a “disinflation, deflation spiral.””
“…risks still remain for New Zealand’s trade- and tourism-focused economy until the pandemic rages on globally.”
New Zealand business confidence dips slightly in February
“The survey’s headline measure showed a net 7.0% of respondents expected the economy to improve over the year ahead. That compared with a 9.4% optimism level in the previous poll in January.”
Global government bonds hit by fresh wave of selling
“US 10-year Treasury yield jumps above 1.4% for first time since start of Covid crisis”
Friday:
RBNZ head Orr: NZD near fair value, negative rates an option
