Falling global rates put pressure on central banks

The Governors of both the RBNZ and the RBA argued this week that falling interest rates across the globe reflect structural as much as cyclical factors. Given that central banks elsewhere will probably reduce interest rates further, Australia and New Zealand may face a stronger currency if they refrained from loosening policy any further.  That’s another reason why we expect the RBA and RBNZ to cut rates to fresh lows over the coming months.