New Zealand Interest Rates - Unchanged again

Tonight at 15:00 EST (20:00 GMT) the interest rates from New Zealand were released. The Royal Bank of New Zealand (the RBNZ for short) has been on hold since March 2011, when they cut 0.5% to 2.5% in response to the earthquake to help things recover. The RBNZ had said they would hike this rate back up as the rebuilding progressed. Since then however the global economy has weakened and New Zealand funding costs have gone up in response the debt crisis in the Eurozone.

There was no hike but RBNZ's Governor Bollard indicated that the domestic economic growth had been mild and inflation was contained and stated the obvious situations overseas. There had been some expectations the RBNZ would hike in mid-2012, this had been pushed out from March 2012 during the December statement, but the NZDUSD still rallied because it still seemed like this was on the horizon. If anything today's statement seems like this hike might be put off even more, if not turning into a possible cut at some point. OF course it depends how situations develop, but Isreal, Thailand & the Philippines have cut recently. Hungary did not hike when they were expected to. Australia is expected to cut in February.

Despite all this the NZDUSD did rally 60 pips, but this was due to the fact that Ben Bernanke was still speaking at his press conference, and all the markets were rallying to what appeared to be some hint of QE3 for March.

Here is a 10 second chart on the NZDUSD forex pair:

and here is a 1 minute chart showing the extension of this run-up after the news: