AUD/NZD spikes from 1.0830 on a 50 bps OCR hike by the RBNZ
|- AUD/NZD has rebounded sharply from 1.0834 as the RBNZ increased its OCR by 50 bps.
- To reduce the risk of inflation sooner, the RBNZ is moving its OCR to neutral rates quickly.
- The RBNZ has elevated its OCR fourth time consecutively and its last three hikes were done by 25 bps.
The AUD/NZD pair has attracted significant bids at around 1.0834 as the Reserve Bank of New Zealand has raised its Official Cash Rate (OCR) higher than the street expectation. RBNZ Governor Adrian Orr has announced an OCR hike by 50 basis points (bps) while the street was expecting status-quo maintenance by the RBNZ.
The RBNZ has been elevating its OCR by 25 bps from the last three monetary policies and a similar action was also expected this time. However, to tame the soaring inflation, the RBNZ has preferred a jumbo rate hike, which may curb the ramping-up inflation significantly. Formally, the RBNZ’s OCR has been increased to 1.5% now. It looks like that RBNZ is attempting to reach neutral rates as early as possible as a swift move approach to a neutral stance will reduce the risks of inflation. The NZ Consumer Price Index (CPI) was recorded at 5.9% for the fourth quarter of CY2021. And, for the first quarter of CY2022, the preliminary estimate is 6.4%, which is indicating the extent to which the inflation in the kiwi area is gearing up.
Meanwhile, aussie investors are on the sidelines ahead of the Unemployment Rate, which is due on Thursday. The street is expecting a slight improvement in Australia’s jobless rate to 3.9% from the prior print of 4%.
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