RBNZ likely to stay pat

Following the FOMC announcements, the Reserve Bank of New Zealand will make its rate decision scheduled at 2000 GMT. Markets do not expect a rate cut as recent inflation data failed to impress the markets, and as risks in China continues to worry the economy. Moreover, the central bank had cut interest rates in December and was firm to keep it unchanged over the coming months.  

The economy faces downside risk as the oil prices continue to decline, with rising uncertainties in Chinese economy. The global turmoil has affected the NZD as it depreciated 5 percent against the USD, reassuring the RBNZ's policy stance.

"As long as the NZD weakens further the RBNZ will leave rates unchanged. Should the downside risks increase notably and/or the NZD appreciate again the RBNZ will take action again. That is exactly what it is likely to signal tonight. That means the NZD remains under downside pressure", says Commerzbank in a research note.