ING: RBNZ Decision Signals Potential for More Aggressive Rate Cuts in the US and UK

According to a report by Jinse Finance, Chris Turner of ING stated that the Reserve Bank of New Zealand’s policy decision on Wednesday highlights the risks facing the US dollar and the British pound, namely that the scale of interest rate cuts could be larger than expected. The Reserve Bank of New Zealand cut rates by 25 basis points, but two policymakers voted in favor of a 50 basis point cut. The central bank noted that inflation may rise in the short term, but with slack in the labor market, it should ease next year. Turner pointed out that the Federal Reserve and the Bank of England face a similar dilemma, uncertain about how to respond to short-term inflation increases. He said the Reserve Bank of New Zealand’s decision serves as a reminder that if the labor market weakens significantly, other central banks may also accelerate the pace of rate cuts.