The New Zealand dollar jumped today, rising for a second day, after the New Zealand central bank kept its main interest rate unchanged yesterday and signaled that it may leave the rate relatively low for some time.
The Reserve Bank of New Zealand kept its Official Cash Rate (OCR) at 2.5 percent. Reserve Bank Governor Alan Bollard explained:
Inflation has settled near the middle of the Bankâs target range, and inflation expectations have fallen.
Bollard also mentioned the impact of the strong currency on the economy and the monetary policy:
While helping contain inflation, the high value of the New Zealand dollar is detrimental to the tradable sector, undermines GDP growth and inhibits rebalancing in the New Zealand economy. Sustained strength in the New Zealand dollar would reduce the need for future increases in the OCR.
NZD/USD climbed from 0.8165 to 0.8261 and NZD/JPY jumped from 66.18 to 67.35 as of 11:31 GMT today.
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