The RBA and RBNZ decisions

Two banks, two structures 

The Reserve Bank of Australia sets a target for the cash rate, the rate at which banks lend unsecured overnight balances to one another. Following a review of the institution, monetary policy decisions moved to a dedicated Monetary Policy Board meeting fewer times a year than the older monthly schedule, with each decision accompanied by a published statement and a press conference by the Governor, and with an unattributed record of votes for and against.

The Reserve Bank of New Zealand sets the official cash rate through a Monetary Policy Committee that includes external members, meets a similar number of times a year, and publishes a record of the meeting. At a subset of those meetings it releases a full Monetary Policy Statement with forecasts. New Zealand was the first country in the world to adopt a formal inflation target, and its central bank legislation has since been amended to add and then remove an employment objective alongside price stability, which is an unusually explicit demonstration that a mandate is a political choice rather than a technical constant.

Both institutions also carry responsibilities that a narrowly monetary description omits, and those responsibilities occasionally show up on the same calendar. The Australian bank publishes a financial stability review and operates the payments system board that governs card interchange and settlement arrangements. The New Zealand bank is the prudential regulator for banks and insurers in its own right rather than sharing that function with a separate agency, and it has used capital requirements as a policy instrument in a way that has attracted considerable domestic debate. Announcements from either institution are therefore not always monetary announcements.

Both economies are also small and open enough that the exchange rate is a substantial part of the monetary transmission mechanism rather than a side effect of it. A move in the currency changes imported prices quickly in an economy that imports a large share of what it consumes, so the exchange rate does part of the work a policy rate would otherwise have to do. Both central banks discuss this openly in their published assessments, and neither treats it as an objective in its own right.

The New Zealand rate track 

The Reserve Bank of New Zealand publishes a projected path for its own policy rate over the forecast horizon. This is not the anonymous, individual, conditional dot chart that the United States publishes, and it is not the market-conditioned fan chart the United Kingdom publishes. It is the Committee's own projection of the rate it expects to set, published as a series.

That makes the New Zealand statement unusual to read, because a change in the projected track is a published change in the institution's own expectation rather than an inference drawn from language. It also creates an accountability problem the institution accepts openly: a published track that is not followed is visibly not followed, and the Committee has repeatedly stated that the track is conditional on its forecasts and is not a promise. Both things are true, and the tension between them is a permanent feature of publishing a path.

The data these decisions sit on 

Australian inflation has historically been published quarterly rather than monthly, which is unusual among comparable economies and means the policy committee works with far fewer inflation observations between meetings than its peers. A monthly indicator series was introduced alongside it, covering a partial basket with a rotating pattern of category updates, so the monthly figure and the quarterly figure measure related but not identical things. New Zealand also publishes its consumer price index quarterly.

Australian labour force data is monthly and is drawn from a household survey with a rotating panel, which produces month to month volatility large enough that the statistical agency itself publishes trend estimates alongside the seasonally adjusted series. Both economies publish quarterly national accounts, and both publish detailed trade data in which commodity exports dominate.

Why these currencies move on other countries' news 

Both currencies are conventionally described as commodity currencies. The Australian dollar's export base is concentrated in bulk commodities, principally iron ore, coal and liquefied natural gas, and its largest export destination is China. The New Zealand dollar's export base is concentrated in agricultural commodities, principally dairy. The correspondence between commodity prices and these currencies is an empirical regularity of long standing, and it is a regularity rather than a mechanism, since it operates through expectations about future export earnings and terms of trade.

A second and distinct convention treats both as risk proxies. Because they are freely floating, actively traded, and issued by small open economies with historically higher policy rates than the largest funding currencies, they have often been the receiving leg of positions funded elsewhere. That structure means they can move on developments in global risk appetite that have no domestic content, and it means positioning can unwind rapidly when funding conditions change.

Timing, and the session they land in 

Both decisions are published during the Asia Pacific session, which places them at the start of the global trading day rather than in the middle of it. For participants in Europe and the Middle East they arrive overnight, and for participants in the Americas they arrive after the previous session has closed. The practical consequence is that the first opportunity many participants have to respond falls at their own market open rather than at the release itself.

Both countries observe southern hemisphere daylight saving, which shifts on dates unrelated to the northern hemisphere changeovers, so the hour at which these decisions land in European and Middle Eastern time changes several times a year without any change to the domestic schedule. Both banks also take an extended break over the southern summer, leaving an unusually long gap between the final decision of one year and the first of the next.