NZD, RBNZ, 5 Day Interest rate rule To cut or raise Interest rate answers are found in all central bank 3 month interest rates.
President Hoover after 1929 crash introduced the 3 month Interest rate to fund Government short term.
America was broke after the crash and all wanted bailouts.
Hoover refused otherwise Government would’ve been broke.
Then began 3 month Interest rate to finance governments. All governments then adopted 3 month interest rates. Canada was first.
In currency trades, exactly what are you trading. Well the 3 month Interest rate. Despite no trader knowledge, they trade day trades by 3 month interest rates. It sets price boundaries and prevents prices from traveling far off course.
5 Day Rule
If the 3 month rate moved 5 basis points lower or higher within 5 days then Central banks will cut or raise.
Why 5 days is because traditional markets to normalize interest rates took 5 days. Means 5 days good Volatility.
Doesn’t qualify to move OCR.
Today’s Rate = 1.23. And Today’s 3 month Bank Bill Reference Rate quoted by NZD Financial Markets Association = 1.24.
Doesn’t qualify to cut or raise.
Qualifies as no OCR movement at today’s meeting.
Today’s markets as in past decades of markets contain a structure and its imperative for traders to understand what the structure is all about and how it operates to trader advantage.