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NZD gains on PM's mistaken GDP comment; office says she was referring to Crown accounts

Tuesday 18th September 2018

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The New Zealand dollar gained after Prime Minister Jacinda Ardern mistakenly said she was "pretty pleased" with gross domestic product growth having received a "hint" ahead of Thursday's official release of the second-quarter economic data.

Her comments were downplayed by her chief press secretary who said she was referring the government's June year financial statements and had "made a mistake." 

The kiwi lifted to 65.84 US cents from 65.78 US cents as at 8am prior to the comments. 

Ardern told NewstalkZB she'd been given "a hint" about the GDP and "I am very pleased with the way we are tracking."  The data, due Thursday, will come under particular scrutiny after the central bank last month kept the official cash rate at 1.75 percent and pushed out the timing of the first rate hike citing weak growth as a concern. Governor Adrian Orr reiterated that “the direction of our next OCR move could be up or down.”

The prime minister's chief press secretary Andrew Campbell said Ardern was not referring to the second-quarter GDP number but the unaudited financial statements of the Crown.

"She made a mistake," he said. "She has not seen and would not see the GDP numbers," Campbell said. "She conflated the two." 

Economists are expecting the data to show GDP expanded 0.8 percent from the first quarter and 2.5 percent from a year ago, according to a Bloomberg poll of 16. The central bank is tipping growth of 0.5 percent.

Stronger-than-expected GDP growth would quell any market expectations of a rate cut. Market pricing for a rate cut also dipped to 44 percent from 50 percent before Ardern's comments. 

(BusinessDesk)

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