Economists at ING are bullish on the NZD/USD and are interested in whether the new government changes the Reserve Bank of New Zealand’s remit – a potentially bullish factor for the Kiwi.
New government, higher rates?
The New Zealand Dollar should benefit like AUD from a gradual optimistic rerating of growth expectations in China.
The recent change in government can have big implications for the RBNZ policy. The new coalition will almost surely be led by the National Party, which promised less spending than the previous Labour-led government, but also tax cuts (which are inflationary). More importantly, it had advocated for a change of the RBNZ remit, so that the dual mandate is dropped to focus on a stricter inflation targeting. The remit review normally happens in June, and should it be changed, it could mean higher for longer rates in New Zealand – an NZD positive.
Recession is a non-negligible risk in 2024, but whether this will mean a more dovish RBNZ will effectively depend on a remit review: should the new government leave it unchanged, then bigger rate cuts would likely get in the way of a smooth NZD recovery
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
Hot
No comment on record. Start new comment.