In its latest Statement of Intent published on Tuesday, the Reserve Bank of New Zealand (RBNZ) noted that the “economic policy settings can be expected to normalize over the medium term,” should the covid cases are contained.
“We are pleased to see economic activity in New Zealand returning to its pre-COVID-19 levels, supported by ongoing favorable domestic health outcomes, and improving global demand and higher prices for New Zealand’s goods and exports.”
“A catch-up in consumer spending and construction activity, supported by the substantial monetary and fiscal stimulus is underpinning employment growth.”
“However, vulnerabilities still remain and the recovery needs continued monetary and fiscal support. “
“As long as COVID-19 is contained and the global and economic recovery is sustained, eventually economic policy settings can be expected to normalize over the medium term.”
In an initial reaction to the above statement, NZD/USD turned south towards the 0.7000, paring back gains.
At the time of writing, the kiwi is trading at 0.7028, up 0.06% on the day, having failed to resist above 0.7050. Attention turns towards Governor Orr’s speech around 0400 GMT.