NZ dollar largely unchanged as RBA cuts cash rate as expected

The New Zealand dollar was largely unchanged after the Reserve Bank of Australia cut the target cash rate a quarter-point to 0.75 percent as expected.

The kiwi traded at 92.78 Australian cents at 5.50pm from 92.75 cents at 8am and 92.71 cents yesterday. It fell to 62.43 US cents from 62.62 cents at 8am.

Globally low interest rates have added pressure on New Zealand's central bank to follow suit, and the RBA's decision to cut the cash rate, while expected, will make it more difficult for the RBNZ to stay put. RBA governor Philip Lowe said the reduction was to "support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target" and took the global environment into account. He said low rates will stay in place for an extended period, and that the board is ready to cut further.

"It was fairly well priced already, ending with the Aussie very slightly lower and the kiwi holding up," said Imre Speizer, head of NZ strategy at Westpac Banking Corp.

He said the lower rate was well signalled and shouldn't force the RBNZ to immediately follow suit.

The New Zealand dollar started the day on the back after a weaker than expected business confidence surveys prompted economists to scale back their expectations for economic growth and consumer price inflation, in spite of a record low official cash rate at 1 percent. The New Zealand Institute of Economic Research's quarterly survey of business opinion showed business confidence at its weakest since the global financial crisis, echoing the results from yesterday's ANZ business outlook.

"That business confidence reading was a pretty horrible reading, but its thunder was stolen by yesterday's ANZ bank survey."

The kiwi traded at 67.58 yen from 67.68 yen at 8am, and fell to 4.4590 Chinese yuan from 4.4720 yuan. It traded at 57.32 euro cents from 57.44 cents and was at 50.82 British pence from 50.93 pence. The trade-weighted index was at 70.08 from 69.89.