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The probability of a rate cut by the Central Bank of New Zealand rate rose on a surprise announcement of the imminent revision of forecasts for the economy.
The Central Bank of New Zealand said that next week will release an unscheduled assessment of the economy. This prompted traders to increase the chances of reducing the interest rate during the August meeting of the Central Bank.
The assessment, which will be published on July 21 and will not include a review of the official interest rate, will be presented for a longer than usual period of political decisions, said the Reserve Bank of New Zealand. Also the Central Bank said that they decided to publish an updated economic assessment due to the 11-week gap between the hearing on June 9, and the next meeting on August 11. After these the chances of lowering the interest rate of the Central Bank by 0.25 per cent in August, increased to more than 60 percent from 40 percent the previous day.
Doubts about the rate cut in August increased after the deputy governor Grant Spencer said last week that the central bank needs to carefully consider the risks to financial stability in the decision to change the monetary policy.
"The revision of economic forecasts will provide another opportunity to express dissatisfaction with the current exchange rate of the national currency - said Darren Gibbs, chief economist for New Zealand in Deutsche Bank AG -. Central Bank would like to see the depreciation of the New Zealand dollar."
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