New Zealand Dollar, NZD/USD, RBNZ, Economy – Talking PointsNZD/USD sees volatility in response to 25 bps RBNZ rate hikeRBNZ projections see intere
New Zealand Dollar, NZD/USD, RBNZ, Economy – Talking Points
- NZD/USD sees volatility in response to 25 bps RBNZ rate hike
- RBNZ projections see interest rate increasing to 2% by end of 2022
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The New Zealand Dollar saw volatile trading, with a bias to the downside, against the US this morning after the Reserve Bank of New Zealand (RBNZ) opted to increase its benchmark rate. The central bank increased its official cash rate (OCR) by 25 basis points, in line with analysts’ expectations. The OCR now stands at 0.75%, which is 50 basis points higher than the post-pandemic low. The NZD weakness may be due to some outsized bets that called for a 50 bps hike.
However, a faster rate tightening cycle was also laid out by the RBNZ as rising prices pressure central bank leaders. The RBNZ now projects a 2% OCT by the end of 2022. The island nation’s inflation rate is at 4.9% and inflation expectations hit the highest level in nearly 10 years, according to a survey released earlier this month. The faster rate hiking forecast may help temper some of those price gains, particularly in the housing market, where mortgage rates have already seen a steep increase.
NZD/USD 1-Minunte Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
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