AUD/NZD trims losses and returns above 1.1500 as the Kiwi sells-off
The post AUD/NZD trims losses and returns above 1. 1500 as the Kiwi sells-off appeared com. The Aussie Dollar is trimming some of the previous day’s losses against the NZD on Wednesday. The pair has returned to levels 1. 1500 after bouncing from the middle range of the 1. 1400s, favoured by a weak Kiwi Dollar, as recent data from Australia and New Zealand has confirmed some RBA-RBNZ monetary policy divergence. New Zealand’s Producer Price Index disappointed on Tuesday. Input prices have shown a weaker-than-expected 0. 2% increase in the three months to September, following a 0. 6% growth in the previous quarter and undershooting market expectations of a 0. 9% growth. These figures, coupled with the country’s weak economic growth, -New Zealand’s economy shrank 0. 9% in the second quarter- are feeding expectations that the central bank will cut interest rates further at its next monetary policy meeting, due next week. Australian data, on the other hand, revealed that wage prices remain steady, growing at a 0. 8% pace in Q3 and 3. 4% year-on-year. In both cases, showing steady growth rates from the second quarter. These figures support the RBA’s cautious monetary policy stance, as reflected in the minutes of its November meeting. The committee members showed a cautious approach to monetary policy and hinted at steady interest rates unless incoming data shows evidence of a weakening economic growth. Central banks FAQs Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or.