Bullish kiwis factor in rate gap

The Reserve Bank of New Zealand held its official cash rate at 2.5 percent, as expected, with central bank governor Alan Bollard forecasting earlier-than-expected tightening in mid-2010. Like neighbour Australia, New Zealand’s central bank is factoring in the wider gap between the benchmark rate and funding costs in its rate decisions. A higher currency and higher long-term rates have also reduced the need for immediate action.

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