Personally for me this was a very interesting week on the charts, as I have never experienced such an event of great magnitude which caused some volatility I have never experienced before. However, a lot of learning in that regard. without dwelling much into the U.S elections, this past week we saw the RBNZ slashing Official Cash Rates for which everyone was pretty much expecting. Even though this was at most priced in, we saw the kiwi going up in price just as the cut was announced. The governor, Greame Wheeler, announced that the RBNZ was now expecting a 1.7% inflation as opposed to the 1.6% previously stated by the bank. The Bank’s pectoral factor model currently sits at 1.5% for the September quarter. Electronic card retail sales nudged up 0.2% to what was expected, 0.4%. The PMI for October was 55.2, a reading that shows expansion in the manufacturing sector.
It is worth noting that New Zealand’s manufactured exports make up around 85% of all merchandise exports from the country and that makes manufacturing and exporting vital for the country. The manufacturing sector is steadily moving towards more innovative and specialized goods and services that earn higher export revenues. The PMI couldn’t quite hang onto its relatively high level of 57.5 in September, at 55.2 in October it was still positive.
Electronic Card Retail Sales
The outlook of spending has been strengthening due to the conditions in the labor market and the economy generally. Both have picked up and this gives people some sort of confidence to spend their money.
Interest Rate Decision
At this week’s Monetary Policy Meeting the RBNZ cut the Official Cash Rate by 0.25% to an all time low of 1.75%. I personally believe that they are done and the next cut is nowhere near even though there are uncertainties. On a statement by Governor Wheeler, He stated that the monetary policy remains to be accomodative and will adjust accordingly. We will see growth strong enough to have inflation settle near the middle of the target range.