The risk of an RBNZ rate hike “is real”

We had the Reserve Bank of New Zealand policy announcement earlier

and a jump for the kiwi$

Westpac response (in brief):

  • RBNZ … was more hawkish on future prospects.
  • RBNZ’s projections continue to reflect the risk of further increases in the OCR in 2024. An easing cycle looks quite some time off.
  • RBNZ’s projections for the OCR were revised 10bp higher to a peak of 5.69% in September 2024, implying around a 75% chance of a further 25bp rate hike.
  • The projections imply a gradual easing of policy from the first half of 2025.
  • The long-run neutral OCR was adjusted up 25bp to 2.5%.
  • … more tightening may be required to ensure inflation returns promptly to target

Bolding is mine.

NZD/USD update:

This article was written by Eamonn Sheridan at Source