NZD/USD: Muted response to RBNZ Governor Orr's comments

Reserve Bank of New Zealand's (RBNZ) governor Adrian Orr was out on the wires soon before press time, pushing back against the government's proposal to add property prices to the central bank's remit. 

"While house prices are an important channel that affects inflation, the monetary and financial policies alone cannot solve property issues," Orr said, while adding that lower interest rates promote spending and investment. 

• RBNZ’s Orr: Monetary and financial policies alone cannot solve property issues

Orr's comments come after Finance Minister Grant Robertson said the central bank should think about out-of-control house prices. Robertson's remarks put a strong bid under the NZD, lifting the NZD/USD pair from 0.6939 to 0.6989

So far, however, Orr's comments have not had a sizeable impact on NZD/USD, leaving the currency pair unaffected near 0.6970. The pair pulled back from the session high of 0.6989 ahead of Orr's comments. 

The odds of RBNZ cutting rates to negative territory have declined over the past few weeks, with New Zealand's relative success in controlling the second wave of coronavirus. 

If implemented, Robertson's recommendation would dash hopes for additional easing in the form of negative rates or bigger bond purchases, as the property prices have soared this year in the wake of coronavirus pandemic and record-low borrowing costs. 

Technical levels