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RBNZ Preview: Rates expected to remain unchanged at final meeting of 2023

By Kyle Rodda

13:04, 28 November 2023

Dollar notes in New Zealand currency. Photo: Jan Mika / Shutterstock

The RBNZ meets for the final time this year on Wednesday, 29th of November, 2023. We preview what to expect and how it could impact the New Zealand Dollar.

New Zealand unemployment rises, but inflation remains stubbornly high

The New Zealand economy is experiencing stagflationary-like conditions, with inflation still significantly above target but the unemployment rate steadily rising. Despite the latest GDP data revealing New Zealand’s economy expanded by a larger-than-expected 0.9% q/q, the figures apply to the June quarter and a backward backward-looking. According to surveys conducted by Bloomberg, economists expect GDP growth to moderate in the final two quarters of this year as New Zealand's economy teeters on recession. 

New Zealand’s jobless rate has progressively increased, with the unemployment rate currently around 3.9%. While a large part of this has been due to employment growth being outstripped by population growth amid elevated migration, the most recent labour market statistics revealed a contraction in employment growth.

(Source: Trading Economics)

Although aggregate demand is weakening in New Zealand, inflation is falling at a moderate pace. The latest CPI data revealed that headline inflation was 5.6% in the September quarter, with core inflation still at a lofty 5.8%. Bloomberg data suggests that economists ought to end the year below 5%.



3,206.48 Price
+1.260% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00


60,121.30 Price
+2.470% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00


20,336.40 Price
+0.570% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 7.0


0.54 Price
-2.240% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

Interest rate markets imply no change to RBNZ policy

As illustrated in the chart below, rates markets imply that the RBNZ will keep policy unchanged at this meeting, with the overnight cash rate remaining at 5.5%. As GDP and jobs growth weakens, the markets are implying the next move from the central bank will be a rate cut, with almost two cuts baked in before the middle of 2024.

The RBNZ’s latest Monetary Policy Statement, released in August, suggested the central bank believes it has reached the peak in interest rates and ought to be cutting rates in 2024. However, the RBNZ sees a less aggressive rate-cutting cycle, with inflation exceeding the 1-3% target range until 2025.

(Source: RBNZ)

NZD/USD rises as markets bet on peak in US rates

The NZD/USD has been predominantly driven by a weaker US Dollar, as a spate of softer data, dovish commentary from the US Federal Reserve, and bets of a peak in US interest rates weigh on the Greenback. The pair is in a short-term uptrend with momentum skewed to the upside and is testing technical resistance at 0.6110. Price is carving out a rising wedge, potentially signalling a looming pullback. Technical support appears to be around 0.6050.

(Past performance is not a reliable indicator of future results)

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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