Share:

The RBNZ took a decidedly hawkish tilt this week as the central bank raises its official cash rates. The terminal rate has now been increased to 4.1% in December 2023 and that is up from 3.95% projected at the prior meeting. The December 2022 projection is also up to 3.69% from the prior reading of 3.41%. So, with the RBNZ hiking by 50bps this week to 3% the RBNZ is pressing on to tackle high inflation.

What about growth?

With the global macroeconomic environment slowing down Governor Orr recognised that there could be below potential growth in New Zealand due to subdued consumer spending. The RBNZ recognised that house prices have dropped from recent high levels and he expected that to continue over the coming year.

Chart

And inflation?

At the last print in July headline inflation for New Zealand was at 7.3%. The RBNZ recognised that domestic inflationary pressures had increased since May to further bring forward the timing of OCR increases. The RBNZ reaffirmed its commitment to bring consumer inflation back down to the 1-3% range. Monetary conditions need to continue to tighten and the RBNZ agreed that maintaining the current pace of tightening remains the best means.

The takeaway

This was a hawkish meeting. The RBNZ increased its rate projections for the future expecting them to peak at 4.1%. It kept Its commitment to hiking rates in order to contain consumer inflation and this should keep the NZD being bought on dips. The best opportunity would come from any signs that the RBA is turning more dovish. In this instance, a potential AUDNZD short trade can open up. However, it would need a fresh catalyst to justify entering a medium-term AUDNZD short.

AUDNZD


Learn more about HYCM

Share: Feed news

High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure. *Any opinions made in this material are personal to the author and do not reflect the opinions of HYCM. This material is considered a marketing communication and should not be construed as containing investment advice or an investment recommendation, or an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. HYCM does not take into account your personal investment objectives or financial situation. HYCM makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast, or other information supplied by an employee of HYCM, a third party, or otherwise. Without the approval of HYCM, reproduction or redistribution of this information isn’t permitted.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD rebounds from multi-week lows, trades above 1.0750

EUR/USD rebounds from multi-week lows, trades above 1.0750

EUR/USD came under heavy bearish pressure and declined to its weakest level in three weeks below 1.0750 on Friday after the stronger-than-expected Nonfarm Payrolls data. Week-end flows, however, helped the pair erase its daily losses.

EUR/USD News

GBP/USD remains on track to snap three-week winning streak

GBP/USD remains on track to snap three-week winning streak

GBP/USD recovered toward 1.2550 after coming in within a touching distance of 1.2500 in the second half of the day after Nonfarm Payrolls came in at 199,000 for November. Despite the recent rebound, the pair remains on track to snap a three-week winning streak.

GBP/USD News

Gold retreats below $2,020 as US yields push higher

Gold retreats below $2,020 as US yields push higher

Gold broke below its daily range and declined toward $2,010 with the immediate reaction to the upbeat US November jobs report. Although XAU/USD managed to recover toward $2,020, rising US Treasury bond yields triggered another leg lower.

Gold News

Bitcoin price could retrace to $42,000 if US Nonfarm Payroll comes in at 180,000

Bitcoin price could retrace to $42,000 if US Nonfarm Payroll comes in at 180,000

Bitcoin price just like other assets, is highly impacted by the macro-financial developments. This includes the Nonfarm Payrolls (NFP) report released by the BLS of the United States. 

Read more

The week ahead – Fed, ECB and Bank of England rate decisions

The week ahead – Fed, ECB and Bank of England rate decisions

When the Federal Reserve kept rates unchanged back in November for the second meeting in a row there was still the distinct possibility that the final meeting of 2023 would provide the possibility of one more rate rise to round off the year in line with Fed policymakers dot plot forecasts of 5.6%.

Read more

Majors

Cryptocurrencies

Signatures