Image source: Yaempongsa © 123RF.com
The Monetary Policy Committee (MPC) of the Reserve Bank of New Zealand is scheduled to meet this Wednesday for one of its regular monetary gatherings, in order to deliberate on the appropriate level of its Official Cash Rate (OCR) in light of the most recent economic developments in New Zealand and globally.
The prevailing market expectations do not project any major changes to the underlying monetary policy, to be implemented by the MPC. Thereby, the interest rate is anticipated to be maintained at the same 0.25 per cent, that was agreed upon by the Committee on its last meeting in mid-March.
The RBNZ is expected to remain vigilant without adopting any major changes to its policy.
At the same time, the Bank is likely to draw out plans for the gradual stabilisation of New Zealand's economy, and also to highlight the keystone stages that need to be accomplished in one such recovery process, akin to what the RBA and the BOE already did this fiscal quarter.
The MPC is unlikely to adopt a hawkish stance in its monetary policy statement; neither is the Committee expected to sound too dovish, given the mixed economic indicators in New Zealand.
On the one hand, the loss of jobs due to COVID-19 has not been as detrimental as previously feared. On the other hand, the underlying business confidence is at a decade-low, which is a major point of concern for New Zealand's policymakers.
The probable surge in volatility following RBNZ's decision on Wednesday is going to affect the NZDUSD pair, which is currently nearing the major resistance level at 0.61562, represented by the 38.2 per cent Fibonacci retracement level.
NZDUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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