The Central Bank of New Zealand announced yesterday that it would cut the official discount rate by 25 basis points to 1.5 percent, the first rate cut since November 2016 and its lowest level in history, with the New Zealand dollar falling more than 70 points in the short term. The lowest fell to 0.6524, and the market retreated from that point in a relatively stable range. The Bank of New Zealand finally took steps to cut interest rates to stimulate a low inflation environment, compared with the previous day, when the Bank of Australia kept interest rates unchanged. The Bank of New Zealand said that given the slowdown in global economic growth and the great uncertainty in global trade, lower demand for goods and services in New Zealand has weighed on domestic spending, engineering and employment growth. Lowering the official cash rate was a unanimous decision by the committee to bring about a more balanced outlook for interest rates. In addition, the Bank of New Zealand cut its inflation forecast, with an annual CPI of 1.7 percent in June 2020, up from 2.0 percent. Inflation is expected to reach 2 per cent in 2021 and had previously been expected to reach in the fourth quarter of 2020. Notably, the Bank of New Zealand said it expected the official cash rate (OCR) to be 1.38% in June 2020 (up from 1.81%) and 1.36% in September 2020 (previously estimated at 1.88%); It was 1.93% in June 2022, making it possible to cut interest rates further. From the technical point of view, the New Zealand dollar yesterday fell to a half-year low, in 0.6530 was strongly supported, as market risk aversion demand still exists, bearish momentum has not completely faded. The upper resistance level can be seen at 0.6760.
