New Zealand's Economy Grows by More Than Expected
SYDNEY—New Zealand's economy grew more than expected in the first quarter as falling interest rates helped lift the country out of an extended downturn, but fresh headwinds are gathering.
The economy grew by 0.8% in the quarter, a pace that was well above the 0.4% expansion forecast by the Reserve Bank of New Zealand, curbing expectations that the central bank will lower interest rates further at its next policy meeting in July.
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Bloomberg
19 minutes ago
- Bloomberg
SNB President Schlegel on Rate Cut Decision, FX Market
00:00 So today we decided to lower interest rates from 25 basis points by 25 basis points to zero. And the reason is that we observed lower inflation pressure in the last months and also quite low inflation. This led us to the decision to lower interest rates again. You said in March that further rate cuts are less likely now and still we see a rate cut today. Was was your hand today forced by how much the franc appreciated since the last interest rate decision. So we always come together as a board. We look at the data, we look at the models and we discuss. And given the lower inflation pressure that we observe in Switzerland, we came to the conclusion that this is the right decision to take today. But you didn't mention the franc in your answer now at all. Like, I think it's safe to say that the inflation pressures subsided because the franc went up. Right. There are some factors at work here. One is certainly the stronger Swiss franc, especially against the US dollar, but it's also tourism that is lower and it's also energy prices that is that were lower and put inflation to the downside to the downside at the Swiss National Bank. We'll look at more monetary conditions. Overall. This means interest rates in the one side, but also the exchange rate on the on the other side. And of course, given that the Swiss franc appreciated, this was certainly also a factor. Since you mentioned since you mentioned the oil price. So with the increase of the oil price from the newly enflamed way and the war in the Middle East, like there we see an increase in the oil price. So is that actually something which could relieve the Swiss inflation situation? Of course, if the oil price increases, this means that inflation also be they'll be a little bit higher. But of course, also the oil price also has an effect on on the economy. What we have seen so far, the increase in the oil price in the last days has only a very small effect on inflation. Back to the franc then. One tool that can be used in the past, the currency interventions to keep a lid on the franc. Did they are they still on the table now? Also with a US president, Donald Trump. The Swiss National Bank is ready to intervene in the FX market if necessary. I will repeat it is quite a lot in the last couple of months and this is still true. It's also important to say that we do not have an FX level in mind. We do not have an FX target. But the FX intervention interventions remain an important instrument that that we have. So Switzerland is not a currency manipulator. When we intervened in the FX market, it was to ensure appropriate monitor conditions to achieve our goal, which is price stability. However, during all of last year, all of 2024, you didn't intervene in a meaningful manner in that affects market at all. So are you scared of Trump? So we do monetary policy for Switzerland and there we have different instruments like the main instrument interest rates, but also FX interventions. And we use them and will also use them in the future to achieve our goal of price stability. You said today when we talk about the policy rate, you said today that you wouldn't go negative likely because of all those consequences that could have. However, if you don't want to go negative, then you basically have to intervene more in the exchange rate if the upward pressure on the franc stays. So doesn't that set you on a confrontation? Doesn't that set up a confrontation with Donald Trump? So, so far, uh, in the last one and a half years have lowered interest rates quite early and also decisively. And this means that at the moment the interest rate is expansionary. And this also has a positive effect, of course, on the on on inflation on the side. On the FX side, your right to intervene in the FX market that's necessary to achieve our goal, which is price stability. It is intentional that you're not mentioning the name of the US President I talk about Switzerland and the Swiss National Bank. I get it. All right, cool. Cool. So looking forward, like on July 9th, which is less than three weeks from today, the 90 day tariff reprieve, which Donald Trump has called for. And so that tariffs on Switzerland could ratchet up to 31% on that day. How much does that worry you for the Swiss economy? Of course, tariffs like this could have an impact on the Swiss economy, but it's it's very difficult to to see the exact amount because almost every enterprise is is is impacted differently. In Switzerland, uh, the Swiss National Bank is not in charge of negotiations. This is, of course, with the Confederation. And the Federal Council just ratified the mandate a few weeks ago. But still, you would have to react to the monetary conditions which politicians present you with. So do you think you might need to react very quickly after July 9th? We will see, uh, when this day comes. And do you think that you can reach your next scheduled decision in September without an unscheduled rate cut in between? How can you make a forecast in this? Sorry that I ask you for another forecasting question. How how likely do you think it is that you will go by the end of the year that you will have to go below zero? I will not do a forecast on this. We do monetary policy in every quarter at our at our assessments. There is a look at all the data and take a decision.
Yahoo
25 minutes ago
- Yahoo
Wall Street ends mixed after the Fed says it's still waiting to see the effects of Trump's tariffs
NEW YORK (AP) — U.S. stocks drifted to a mixed finish on Wednesday after the Federal Reserve indicated it may cut interest rates twice this year, though it's far from certain about that. The S&P 500 finished nearly unchanged and edged down by less than 0.1% after flipping between modest gains and losses several times. The Dow Jones Industrial Average dipped 44 points, or 0.1%, and the Nasdaq composite rose 0.1%. Treasury yields also wavered but ultimately held relatively steady after the Fed released a set of projections showing the median official expects to cut the federal funds rate twice by the end of 2025. That's the same number they were projecting three months ago, and it helped calm worries a bit that inflation caused by President Donald Trump's tariffs could tie the Fed's hands. Cuts in rates would make mortgages, credit-card payments and other loans cheaper for U.S. households and businesses, which in turn could strengthen the overall economy. But they could likewise fan inflation higher. So far, inflation has remained relatively tame, and it's near the Fed's target of 2%. But economists have been warning it may take months to feel the effects of tariffs. And inflation has been feeling upward pressure recently from a spurt in oil prices because of Israel's fighting with Iran. Fed Chair Jerome Powell stressed on Wednesday that all the uncertainty surrounding tariffs means the median forecast for two cuts to interest rates this year could end up being far from reality. 'Right now it's just a forecast in a very foggy time,' he said Fed officials are waiting to see how big Trump's tariffs will ultimately be, what they will affect and whether they will drive a one-time increase to inflation or something more dangerous. There is also still deep uncertainty about how much tariffs will grind down on the economy's growth. 'Because the economy is still solid, we can take the time to actually see what's going to happen,' Powell said. 'We'll make smarter and better decisions if we just wait a couple months or however long it takes to get a sense of really what is going to be the passthrough of inflation and what are going to be the effects on spending and hiring and all those things.' Adding to the uncertainty Wednesday were continued swings for oil prices. After topping $74 during the morning, the price for a barrel of benchmark U.S. oil dropped below $72 before settling at $75.14, up 0.4% from the day before. Brent crude, the international standard, rose 0.3% to $76.70. Oil prices have been yo-yoing for days because of rising and ebbing fears that the conflict between Israel and Iran could disrupt the global flow of crude. Not only is Iran a major producer of oil, it also sits on the narrow Strait of Hormuz, through which much of the world's crude passes. Trump said on Wednesday that Iran has reached out to him and that it's not 'too late' for Iran to give up its nuclear program, though he also declined to say whether the U.S. military would strike the country. 'I may do it. I may not do it,' he said. 'I mean, nobody knows what I'm going to do.' On Wall Street, Nucor rose 3.3% after the steelmaker said it expects to report growth in profit for all three of its operating groups in the second quarter. It said it benefited from higher selling prices at its sheet and plate mills, among other things. All told, the S&P 500 fell 1.85 points to 5,980.87. The Dow Jones Industrial Average dipped 44.14 to 42,171.66, and the Nasdaq composite added 25.18 to 19,546.27. In the bond market, Treasury yields held relatively steady following a few wavers up and down. The yield on the 10-year Treasury edged down to 4.38% from 4.39% late Tuesday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do with its overnight interest rate, held at 3.94%. The moves followed a mixed set of reports on the U.S. economy released earlier in the day. One said fewer workers applied for unemployment benefits last week, which could be an indication of fewer layoffs. But a second report said that homebuilders broke ground on fewer homes last month than economists expected. That could be a sign that higher mortgage rates are chilling the industry. In stock markets abroad, indexes were mixed across Europe and Asia. Tokyo's Nikkei 225 rose 0.9%, and Hong Kong's Hang Seng fell 1.1% for two of the bigger moves. ___ AP Writer Jiang Junzhe contributed. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
27 minutes ago
- Wall Street Journal
Stock Futures Slip in Holiday-Thinned Trading
U.S. index futures fell Thursday, as conflict in the Middle East and the Federal Reserve's hesitance to cut interest rates weighed on markets. U.S. equity and bond markets were closed for the Juneteenth holiday, but futures continued to trade. Contracts tied to the S&P 500 and Dow Industrials fell 0.4%. Nasdaq-100 futures fell 0.6%.
