Search ForexCrunch

The Reserve Bank of New Zealand (RBNZ) is expected to keep rates steady at 0.25% in November and unveil a new stimulus tool, heading towards negative rates. Kiwi’s fate hinges on forward guidance and risk sentiment, FXStreet’s Dhwani Mehta reports. 

The policy announcement is scheduled this Wednesday at 01:00 GMT followed by Governor Adrian Orr’s Orr will hold a press conference at 02:00 GMT.


  • Reserve Bank of New Zealand Preview: Forecast from seven major banks
  • NZD/USD to continue surfing the tide of global news above 0.68

Key quotes

“The RBNZ is likely to keep the Official Cash Rate (OCR) unchanged at a record low of 0.25% for the fifth straight month in November. However, the central bank is set to introduce a new stimulus tool in a Funding for Lending Programme (FLP). The new policy tool will provide cheap funding to the banks, allowing them to further reduce their lending rates.”

“The FLP is seen as a crucial step towards negative interest rates, as the Kiwi central bank prepares for sub-zero rates next year, in a bid to spur economic growth. The programme could be established before the end of the year.”  

“The New Zealand Institute of Economic Research’s (NZIER) Shadow Board continues to question the need for negative rates and additional quantitative easing (QE) program expansion. Therefore, it’s important for the RBNZ to launch the FLP to spur growth and make a negative OCR effective when it plans to deploy sub-zero rates early next year.”

“The market mood remains upbeat as the progress in vaccine trials globally paves that way for a solid economic recovery, benefiting the higher-yielding assets, including the Antipodean. Therefore, a strong dovish language in the policy statement is needed to alter NZD/USD’s bullish course. Although, the risk sentiment at the time of the announcement could also impact the kiwi’s reaction.”