Ex-RBNZ’s Grimes calls for 75bps hike, bond sales, NZD/USD regains 0.6700

Dhwani Mehta FXStreet

In an MNI interview on Thursday, Arthur Grimes, a former Reserve Bank of New Zealand (RBNZ) Chairman and Chief Economist, said that he believes the central bank should hike the benchmark rate by 75-basis points (bps) at its next week’s policy meeting.

Key quotes

“Called on for the bank to begin selling some of the NZD50 billion in bonds purchased as part of the recent pandemic programme of Quantitative Easing.”

“Been urging the RBNZ to tighten policy for around 18 months, and that he considered current policy settings to be "ludicrous."

"To think of unemployment at 3.2%, with 6 % inflation, and if they increase rates by 25 basis points then the Official Cash Rate will be at 1%, it just doesn't make sense."

“25 basis points next week is "too little too late."

"They need to do a real big move now, say 75 basis points now and then another 50 and then another 50.”

“It was a "bizarre" situation for real interest rates to be negative with the economy overheating, even as house prices - up 27.4% last year according to research house CoreLogic - start to cool.”

Market reaction

The kiwi dollar is coming out as strongest amongst the G10 currencies so far this Thursday’s Asian trading, despite the mixed market mood.

NZD/USD is adding 0.39% on the day, trading at 0.6704, as of writing.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD stuck as the RBA talks tough into a slowdown

The Australian Dollar is going nowhere in a hurry, and the contradiction at its core explains why. The Reserve Bank of Australia keeps dangling the prospect of another hike, yet the economy it governs just expanded 0.3% in the first quarter, a clear step down from the prior pace. A central bank threatening to tighten into a visible slowdown is not a recipe for conviction in either direction, and the tape shows it.

USD/JPY: Japanese Yen coiled at the line, leaning on everyone but Japan

The Yen is doing very little, and that stasis is the whole story. USD/JPY sits glued near 160.00 not because Japan has found new strength, but because two outside forces are fighting to a draw over it: a US rate complex that keeps the dollar bid, and a Ministry of Finance that refuses to let the line break.

Gold declines below $4,500 on stalled US-Iran ceasefire talks, US NFP data looms

Gold price edges lower to near $4,470 during the early Asian session on Friday. The precious metal remains volatile amid ongoing geopolitical turmoil. Traders will closely monitor the developments surrounding the US-Iran peace deal and the US May employment report later on Friday.

Bitcoin falls below $64K as demand turns negative, short-term holders' selling intensifies

Bitcoin has fallen below $64,000 on Thursday amid weakening market demand and mounting selling pressure from short-term holders. The leading cryptocurrency slipped toward the $63,000 level amid a broader risk-off environment, with several key metrics signaling one of the most challenging periods of the current market cycle.

Nonfarm payrolls: Testing the limits of Fed policy patience

The upcoming nonfarm payrolls report for May will provide the final update on the US labor market before Kevin Warsh attends his first policy meeting as the new Fed Chair later this month.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.