The Federal Reserve in the US meets next week, and there’s a good chance they do nothing. That would see the upper bound of the Fed Funds Rate, the US version of our Official Cash Rate (OCR), remain at 4.50 per cent. With our OCR at 4.25 per cent, the unusual situation of us having a lower policy rate than the US is likely to persist a bit longer. In fact, if financial markets are correct this gap is likely to widen significantly. How might this impact the NZ dollar, and what could turn things around?
