(RTTNews) - Monday, falling commodity prices and global economic slowdown may prompt New Zealand's central bank to cut key interest rate by 75 basis points to 4.25% in January, Bloomberg reported citing a weekly report from the ANZ Bank.
ANZ said softer commodity prices and the deterioration in the global economic picture places more downward pressure on the domestic export sector, which should reflect on lower exchange rates. Earlier, the bank was expecting only a 50 basis point reduction in January.
New Zealand's commodity prices fell 7.4% in December, reflecting the fifth consecutive decline in prices, according to ANZ's report published on January 7. In other recent developments, the unemployment rate in the US rose to its highest levels since 1993, while Eurozone economic sentiment reached a record low. There were also accelerating signs of weakness in the Asian markets, with exports of countries like South Korea weakening, China's manufacturing sector slowing, and a sharp deterioration in Singapore's quarterly GDP in December.
The Reserve Bank of New Zealand has cut the official cash rate by a cumulative 3.25% since July in order to revive the slowing economy. The ANZ Bank maintained its end point to the OCR cycle at 3.5%.
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