FXStreet reports that economists at MUFG Bank discusses NZD/USD outlook.

“The kiwi has derived some support from the RBNZ’s more upbeat economic outlook although they have stressed that they will maintain loose policy for longer. The RBNZ now views risks to the economic outlook as ‘balanced’ rather than ‘less skewed to the downside’. The RBNZ still sees one more quarter of GDP contraction in Q1 before the economy recovers more sustainably. The GDP forecast for this year was lifted to 4.0% up from 3.6%.”

“While we believe that the RBNZ is unlikely to lower rates further, the RBNZ has emphasized that stimulative settings will be maintained for a prolonged period of time, until it is confident of employment reaching the maximum sustainable level and inflation is sustainably around 2%.” 

“The RBNZ are understandably cautious that laying out plans to tighten policy well ahead of other major central banks would encourage an even stronger kiwi. The fundamentals though still point to further strength which the RBNZ can only dampen.”