The Reserve Bank of New Zealand maintained interest rates on hold after the CPI inflation came in flat in the second quarter. The decision made by the RBNZ was already anticipated by analysts which is followed by the unexpected decline in the employment rate in Q2 together with the weak growth in gross domestic product. During the first quarter of 2017, the economy of New Zealand increased by 0.5% below trend, after the slight growth of 0.4% in the last quarter due to temporary factors such as earthquake. The central bank failed to push higher rates prior the Q3 of 2019 as shown in the forecasts issued associated with the monetary policy statement as indicated in the previous projections. The banks further downgrade its assessment on inflation for 2018 and 2019. Amid dovish tone of the RBNZ regarding interest rates, the Kiwi dollar in terms of trade weighted rose. This is one of the concern of the bank for it has the potential to weigh downward pressure on prices. The New Zealand dollar made light changes versus the greenback after the announcement.
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