New Zealand hikes official cash rate

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New Zealand hikes official cash rate
New Zealand hikes official cash rate

Wellington, Nov 24 | New Zealand’s Monetary Policy Committee agreed on Wednesday to raise the Official Cash Rate (OCR) to 0.75 per cent.

The committee agreed it remains appropriate to continue reducing monetary stimulus so as to maintain price stability and support maximum sustainable employment, reports Xinhua news agency.

“The level of global economic activity continues to rise, supported by accommodative monetary and fiscal policy settings, and the relaxation of Covid-19 health-restrictions. The pace of global economic growth has ebbed however, due to the elevated uncertainty created by the persistent virus,” the committee said in a statement.

Global supply-chain disruptions are causing both cost pressures and constraints on production, at a time when consumer demand remains strong.

Central banks globally face the challenge of distinguishing between transitory price increases and underlying sustained inflation pressures to assess the need for, and timing of, reductions in the level of monetary policy stimulus.

New Zealand’s public health restrictions are easing as the country transitions into the Covid-19 Protection Framework.

The framework will enable greater mobility of people, and goods and services. With the easing of restrictions, it is anticipated that the Covid-19 virus will become more widespread geographically, albeit manageable for health authorities and less harmful for those vaccinated.

However, household spending and business investment will be dampened in the near-term by these ongoing health uncertainties, the statement said.

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The recent nationwide health-related lockdown, the more prolonged restrictions in Auckland, Northland and the Waikato, and the continued Level 2 restrictions elsewhere, resulted in a sharp contraction in economic activity.

Despite these lockdowns, the committee noted that underlying economic strength remains supported by aggregate household and business balance sheet strength, fiscal policy support, and strong export returns.

Capacity pressures have continued to tighten. For example, employment is now above its maximum sustainable level. A broad range of economic indicators highlight that the New Zealand economy continues to perform above its current potential.

Headline CPI inflation is expected to measure above 5 percent in the near term before returning towards the 2 per cent midpoint over the next two years. The near-term rise in inflation is accentuated by higher oil prices, rising transport costs and the impact of supply shortfalls. These immediate relative price shocks risk generating more generalized price rises given the current domestic capacity constraints, the statement said.

The committee noted that further removal of monetary policy stimulus is expected over time given the medium term outlook for inflation and employment.

Source: IANS

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Share Market Closing Bell: Nifty ends below 16,150, Sensex falls 236 pts

Share Market Closing Bell: Nifty ends below 16,150, Sensex falls 236 pts

The NIFTY 50 had a positive opening and made an intraday high at 16262.80 level but showed selling pressure from the top and made an intraday low at 16078.60 level and closed the session at 16125.15 level with a loss of 89.55 points However, Bank nifty closed the session at 34290 level with a gain of 42 points. VIX closed at 25.70 up by 9.83%.

33 stocks out of NIFTY 50 closed in Red which suggest broad based selling. Nifty Healthcare, FMCG, IT, capital goods indices down 1 percent each while Nifty Auto & Bank ended in Green. Nifty Stocks like DRREDDY, GNFC, POWERGRID, KOTAKBANK were the top gainers, While DIVISLAB, TECHM, GRASIM & HINDUNILVR were top losers. The Nifty has confirmed the shooting star kind of pattern on a daily time frame which indicates downside movement momentum for an upcoming session.

Moreover, from the last 14 days Nifty has been trading in a range of 15750-16410 levels, either side breakout can direct further direction. In addition, Nifty has given a closing below 21-Day Moving Average which indicates weakness in the Nifty.

However, the momentum indicators MACD & Stochastic were trading with a positive crossover & reversed from oversold zone on a daily chart which suggest a northward journey in the Nifty. The Nifty may find Strong support around 16000 levels, while on the upside 16300 may act as an immediate hurdle. On the other hand, Bank nifty has support at 33600 levels while resistance at 34800 levels.

Palak Kothari
Research Associate
Choice Broking

Source: Choice India

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