
Is the NZD rally justified despite RBNZ rate cut in Dec’2015?
The Reserve Bank of New Zealand met on December 9th for its final monetary policy review for the year. Heading into the RBNZ's monetary policy event, the markets were widely divided on whether the New Zealand Central bank would cut rates or not, given that the it is an almost certainty that the US Federal Reserve would hike rates at the meeting on December 17th.
However, the RBNZ did indeed deliver a 25 bps rate cut, bringing the overnight cash rate from 2.75% previously to 2.50%. In the monetary policy statement from the RBNZ which can be read here, the Central Bank noted that it felt justified that the current rate cut would help New Zealand's inflation move back into the 1.0% - 3.0% target range by mid 2016. The Central bank also accepted the view that inflation will remain weak in t...