New Zealand Balances Inflation and Investment Reforms

New Zealand Inflation Steady at 2%, Rate Cut Expected

New Zealand’s annual inflation rate remained steady at 2% in the fourth quarter of 2024, slightly higher than anticipated but still within the Reserve Bank of New Zealand’s target range of 1–3%. On a quarterly basis, the Consumer Price Index (CPI) rose by 0.5%, easing slightly from a 0.6% increase in the previous period.

(New Zealand CPI q/q Chart, Source: Forex Factory)

The data indicated that price pressures were largely contained, bolstering expectations for a 50-basis-point rate cut at the central bank’s February meeting.

NZ Eases Investment Rules to Boost Growth and Innovation

Meanwhile, New Zealand Prime Minister Christopher Luxon announced plans to ease foreign investment regulations to attract international capital. This initiative is part of his government’s strategy to stimulate economic growth and create jobs amid a weakened economy. The country entered a recession in the third quarter of 2024, with economic activity contracting more than expected.

The policy aims to boost capital inflows across key sectors, including banking, fintech, transport, energy, and manufacturing. Luxon emphasized that his vision is to encourage more start-ups, IPOs, and innovation while ensuring New Zealand reaps the benefits of high-quality global investments.

Technical Analysis of NZD/USD Price Chart

(NZD/USD Daily Price Chart, Source: Trading View)

The overall trend for the NZD/USD currency pair remains bearish, as indicated by the lower highs and lower lows within the descending channel. However, with recent significant bullish momentum, a breakout of the current structure is possible. If the price successfully breaks through this rectangular zone, it will form a higher high and regain its bullish momentum.

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