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The RBNZ is set to leave rates unchanged but hint about future policy and provide new forecasts. While recent economic performance has been upbeat, headwinds to the global economy remain prevalent, potentially triggering a dovish stance that may weigh on NZD/USD.

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Key quotes

“Adrian Orr, Governor of the RBNZ, has previously opened the door to negative interest rates and even monetary financing of the government in Wellington. If he reiterates his willingness to set sub-zero borrowing costs, the New Zealand dollar has room to the downside – despite the relatively upbeat economic performance.”

“The RBNZ’s bond-buying scheme currently stands at NZ$60 billion, and there is room to expand it. Going as far as purchasing foreign bonds would already have a detrimental impact on the kiwi, yet remains highly unlikely.”

“It is essential to note that the RBNZ’s decision comes ahead of the September 19 elections and Orr would prefer to stay out of the spotlight, refraining from bombastic statements. Nevertheless, the central bank is highly respected in New Zealand, and its outlook could rock the kiwi.”