On Wednesday, August 14th at 10:00, the Reserve Bank of New Zealand will hold an interest rate decision. The latest news reports that there is a divergence of opinion among the New Zealand Federal Reserve's Shadow Committee on whether to cut interest rates. It is worth noting that most people suggest that the Reserve Bank of New Zealand cut interest rates by 25 basis points this week. The considerations behind this decision are closely related to the current situation and may have a significant impact on the direction of New Zealand's monetary policy.

The New Zealand Institute of Economic Research (NZIER) has a "shadow committee" composed of analysts. The Shadow Committee is independent of the Reserve Bank of New Zealand and does not represent what the Reserve Bank of New Zealand will do, but rather what they believe the Reserve Bank of New Zealand should do. That is to say, the Shadow Committee does not rehearse what they believe will happen, but rather what they believe should happen.

The key points of the Shadow Committee report are as follows:

① There is disagreement among the Shadow Committee of the New Zealand Economic Research Institute regarding whether the Reserve Bank of New Zealand should lower interest rates in its August monetary policy statement;

② More than half of the Shadow Committee members believe that considering the continued slowdown in the New Zealand economy and labor market, as well as the annual CPI inflation approaching the inflation target range of 1% to 3%, it is now necessary to lower interest rates by 25 basis points;

③ Other members suggested that the Reserve Bank of New Zealand maintain interest rates at 5.50%;

④ A committee member believes that there is still insufficient evidence from economic data indicators to prove that the current interest rate cut is reasonable.

Based on the above news, if the Reserve Bank of New Zealand decides to cut interest rates by 25 basis points this week as expected by most shadow committee members, it may suppress the NZD/USD.

NZD/USD daily chart