The Reserve Bank of New Zealand (RBNZ) left the Official Cash Rate (OCR). Economists at Commerzbank analyze the Monetary Policy Statement and its implications for the New Zealand Dollar (NZD).
Further rate hikes are possible now
There was no rate hike today. However, the RBNZ’s MPC shifted its expectation of future key rate developments to the upside. Further rate hikes are possible now. Probably not very many, but still: that makes rate cuts as early as next year unlikely.
The RBNZ remains sceptical whether the rate hikes implemented so far will be sufficient to return inflation into the target area (1% to 3%) on a sustainable basis. That is the qualitative difference between the inventors of direct inflation control and the majority of the other G10 central banks.
Anyone who believes – as we at Commerzbank Research do – that the recent period of inflation has catapulted us out of the low inflation environment of the 2010s and that we are facing permanent inflation pressure once again (as was the case in the 1990s for example) will prefer the RBNZ’s approach over that of the other G10 central banks. And they will consider the initial market reaction to the RBNZ decision to be too limited rather than excessive.
...and life is not easy for NZD bears in the fortified camps Compendium, Aquarium, Laudanum and Totorum.
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.