Australia and New Zealand’s Central Banks expected to cut interest rates this week

The Reserve Bank of Australia holds a rate announcement meeting first thing tomorrow. The market is expecting at least another 75 basis points rate cut in order to decrease the interest rate differential between the current Australian rate 5.25% and the Fed 1.00% as the later approaches zero.

The prospects for Australian exports have decreased specially after China announced a 9.4 point reduction of its PMI.  Disinflation has pushed Inflation figures to yearly lows and the Central Bank wishes to cut its benchmark rate in order to boost economic growth.

For more Australian Economic Indicators visitFXEconostats Australian Data

The Reserve Bank of New Zealand has not been as aggressive as the Australian Central Bank in cutting its interest rates. The Cast Rate is one of the most relevant NZD Economic Indicators.

The market is expecting a cut as big as 150 basis points which would drive the Cash Rate to its lowest in 5 years, but a decision that could boost the already in a recession New Zealand economy.

The New Zealand Cash Rate reached 8.25% in July last year and was unchanged for almost a year until a 25 basis point cut in July of 2008. Two more cuts (50bps and 100bps) have dropped the still highest interest rate in the developed world to 6.50%. The RBNZ is expected to cut yet again, to reduce the interest rate differential with the Fed’s benchmark rate of 1.00% that is also expected to be cut to boost US economic growth.

For more New Zeland Economic Indicators. visit FXEconostats New Zealand Data

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza