Global slowdown- more rate cuts to follow?
Currencies Direct September 11th 2008 - 2 minute read

Global slowdown- more rate cuts to follow?
The concern of a global economic slowdown last night prompted New Zealand’s central bank to slash rates by 0.5%, going against market expectations of a 25 basis point cut. The aggressive move was followed with Governor Alan Bollard emphasising that the large cut did not mean that the Reserve Bank of New Zealand (RBNZ) had changed its view on how far down they would push rates but rather that cuts were being made sooner to combat the slowing growth. Central banks around the world are now thought to be eyeing rate cuts to combat the risks to growth allowing inflation fears to take a back seat for the meantime.
The USD continued its rally with EURUSD trading below 1.40 overnight and cable trading below 1.75. Where the USD gets its strength from is difficult to determine but certainly the fall in Oil prices have given it a boost. Some theorise that investors in the US are beginning to bring their bucks back home due to risk aversion in a slowing global environment. However, some will question whether the USD has appreciated too quickly given the continuing problems in the US economy itself and the dangers a stronger dollar could present to the export industry there.
The European Commission (EC) slashed its economic growth forecast for 2008 from 1.7% to 1.1% for the UK and warned it will fall into recession in 2008 with Germany and Spain following suit. The UK treasury countered that the British economy was “well placed” to deal with the current challenges citing “employment levels near record highs, interest rates that are historically low and the past decade of rising incomes and job creation”.
Data out today is fairly limited with the US hogging the limelight by way of initial jobless claims (market expectations of around 430k) and US Trade Balance (market expectations of around –USD58.5bln).
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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