Breaking: RBNZ hikes OCR to 2% as expected but sees higher future rates to prior outlooks, sending kiwi higher

The Reserve Bank of New Zealand has hiked the Official Cash Rate by 50 bps to 2% and the markets are now on the lookout for the pace of future tightening for which the Monetary Policy Statement, (MPS), will potentially shed some light. 

''With fears of a hard landing at the core of what’s eating away at risk sentiment, as we’ve been saying for a while, if the RBNZ can strike the right balance between “we’ve got this” on inflation while signalling that it is cognisant of recession risks (not an easy job) while also preserving optionality, that’d likely be positive for the Kiwi,'' analysts at ANZ Bank said

RBNZ rate decision & MPS

  • RBNZ raises the official cash rate 50 basis points to 2.00% as expected.
  • RBNZ sees official cash rate at 2.68% in September 2022 (pvs 1.89%).
  • RBNZ sees official cash rate at 3.88% in June 2023 (pvs 2.84%).
  • RBNZ sees TWI NZD at around 71.8% in June 2023 (pvs 71.6%).
  • RBNZ sees annual CPI 3.5% by June 2023 (pvs 2.6%).
  • RBNZ sees official cash rate at 3.95% in September 2023 (pvs 3.1%).
  • RBNZ sees official cash rate at 3.51% in June 2025.

All but one of 21 economists in the Reuters poll forecast the Reserve Bank of New Zealand (RBNZ) would hike the official cash rate (OCR) by 50 basis points to 2.00%. One economist expected a 25 basis point hike.

Meanwhile, "a larger and earlier increase in the OCR reduces the risk of inflation becoming persistent, while also providing more policy flexibility ahead in light of the highly uncertain global economic environment," the RBNZ said in a statement.

Full Statement 

The statement is hawkish and this is supporting the kiwi higher as follows:

NZD/USD update

As per the pre-RBNZ technical analysis, NZD/USD Price Analysis: Bulls seeking a higher correction on weekly chart, the bears were in the process of mitigating some of the price imbalance the 4-hour chart as follows:

But following the test of the 38.2% Fibo, the decision has sent the kiwi higher to take on the resistance as follows:

The RBNZ is signalling higher rates ''to ensure annual inflation returns within its target range over the next two years.''

''Interest rate decisions will likely become more difficult over the second half of the year, especially as evidence of cooling demand starts to mount. As such, we anticipate they will return to more normal 25bp hikes as they assess how previous interest rate hikes are transmitting through the economy,'' analysts at ANZ Bank argued.

Meanwhile, the outcome leaves the weekly correction intact and the price is on track for a move into the prior swing lows that have a confluence with the 38.2% Fibonacci retracement level of the prior weekly bearish impulse as follows:

About the RBNZ Interest Rate Decision

RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content

Recommended content

Editors’ Picks

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD continues to decline toward 1.0250 during the American trading hours on Friday. After the data published by the UOM showed that the long-run inflation outlook rose to 3% in August from 2.9% in July, the dollar gathered strength against its rivals, weighing on the pair.


GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD is trading deep in negative territory near 1.2100 during the American session on Friday. With the UoM's Consumer Sentiment Survey pointing to a modest increase in the long-run inflation outlook, the US Dollar Index extended its rally, reflecting a broad dollar strength.


Gold clings to modest gains above $1,790

Gold clings to modest gains above $1,790

Gold stays relatively resilient on Friday and trades modestly higher on the day above $1,790. Although the greenback continues to outperform its rivals on the latest US data, falling US Treasury bond yields help XAU/USD hold in positive territory.

Gold News

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shytoshi Kusama, the project leader of Shiba Inu announced the launch of Shiba Eternity for Vietnamese players. The game is available for testing and the team has asked users for their review. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!