New Zealand’s economy shrank for a second consecutive quarter in the three months to July, putting the island nation formally into recession. Quarterly Gross Domestic Product fell -0.2% to bring annualized growth to 1.0%, the lowest in 2 years. The release only confirmed what had been a working assumption of New Zealand’s monetary authorities: RBNZ Governor Alan Bollard has already slashed interest rates by 75 basis points over the last two policy meetings and the market is pricing in an additional 150bps in monetary easing over the next 12 months. To that effect, the New Zealand dollar actually rose about 70 pips after the release because quarterly growth declined less than economists had forecast.
For a complete listing of this week’s data releases, please see the DailyFX Economic Calendar.