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The Bank Of New Zealand And The Bank Of Canada Kept Interest Rates Unchanged At 0.25%


The Bank Of New Zealand And The Bank Of Canada Kept Interest Rates Unchanged At 0.25%

The Bank of New Zealand announced after the interest rate meeting on Wednesday (14th) that it will keep the current 0.25% official interest rate unchanged, but said that it will stop its 100 billion New Zealand dollar bond purchases on July 23, that is, next Friday. The rapid tightening of monetary policy by the New Zealand Central Bank is indeed a bit unexpected by the market. Although the central bank did not change its future interest rate hike schedule during the meeting, according to the results of the meeting in May, the bank said it would not start the interest rate hike cycle until September next year. However, after the Bank of New Zealand quickly announced that it would stop buying bonds, according to the changes in New Zealand dollar interest rate futures prices, the current market estimates that the Bank of New Zealand’s last interest rate meeting this year (at November 24) will have a 90% chance of increase. 

In addition, the Bank of Canada also discussed interest rates last night. Like the Bank of New Zealand, it kept interest rates unchanged at 0.25%, but lowered the weekly bond purchase amount from the original 3 billion Canadian dollars to 2 billion Canadian dollars. The Central Bank of Canada stated that the adjustment of the bond purchase plan reflects the continued economic recovery and increased confidence in the economic outlook. However, there is still considerable overcapacity in the local economy, which requires extraordinary monetary policy support, and the recent spread of the variant virus is also worrying. However, progress in vaccination and the relaxation of restrictions are expected to drive a strong economic rebound in the second half of the year. Although the Bank of Canada expects the economy to grow by 6% and 4.5% respectively this year and next, the bank still estimates that its fastest interest rate hike is still in the second half of 2022.

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