HSBC expects RBNZ to keep rates on hold until 2013
(16 May 2012 – New Zealand) According to HSBC, the high New Zealand dollar will force the Reserve Bank of New Zealand (RBNZ) to keep rates on hold until early next year.
But the central bank would be reluctant to actually cut rates (from the current 2.5 percent) unless there was another big global economic shock, HSBC said.
International commodity prices had fallen back from recent peaks, but the New Zealand dollar had not fallen in line with that decline, which dampened export incomes, HSBC said.
'A strong currency is just another in a string of challenges that have hampered New Zealand's (economic) recovery,' HSBC economist Luke Hartigan said.
The dollar remained stubbornly high, despite the tepid performance of the economy, which had struggled to recover from the global financial crisis four years ago.
With a high dollar and re-emerging concerns about the European debt crisis, HSBC now expected the Reserve Bank to keep official interest rates on hold for the rest of the year, before moving rates up in the March quarter.
International commodity prices had fallen back from recent peaks, but the New Zealand dollar had not fallen in line with that decline, which dampened export incomes, HSBC said.
'A strong currency is just another in a string of challenges that have hampered New Zealand's (economic) recovery,' HSBC economist Luke Hartigan said.
The dollar remained stubbornly high, despite the tepid performance of the economy, which had struggled to recover from the global financial crisis four years ago.
With a high dollar and re-emerging concerns about the European debt crisis, HSBC now expected the Reserve Bank to keep official interest rates on hold for the rest of the year, before moving rates up in the March quarter.
Subscribe