AUD/NZD nosedives below 1.0940 as RBNZ announces an interest rate hike by 50 bps
- AUD/NZD has plunged to near 1.0934 on consecutive 50 bps OCR hikes by the RBNZ.
- RBNZ’s OCR has been elevated to 2%, in line with the estimates.
- Aussie bulls are awaiting the release of the monthly Retail Sales later this week.
The AUD/NZD pair has been offered strongly by the market participants after the Reserve Bank of New Zealand (RBNZ) announced a rate hike by 50 basis points (bps). The cross has fallen sharply below 1.0940 as the RBNZ has elevated its Official Cash Rate (OCR) to 2%.
The interest rate decision announcement has come in line with the market consensus. A jumbo rate hike to contain the inflationary pressures were highly required in the kiwi area. In the first quarter of CY2022, the annual Consumer Price Index (CPI) was recorded at 6.9%, significantly higher than the targeted boundary of 2%. Keeping in mind the elevated price pressures and tight labor market, RBNZ Governor Adrian Orr is deploying its quantitative weapons to trim the impact on the economy.
No one could deny the fact that the consecutive OCR hike by 50 bps would do better to rein in the roaring inflation but along with that, it is not early to say that the RBNZ has pressed the recession button in the kiwi zone. A prompt tightening action by the RBNZ is going to absorb liquidity from the market at a much more rapid pace.
Meanwhile, the second antipodean is awaiting the release of the Retail Sales later this week. The Australian Bureau of Statistics is expected to report a serious plunge in the economic data. A preliminary estimate for monthly Retail Sales is 0.9% vs. 1.6% reported last month.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
