Orr Speech: RBNZ Governor speaks on interest rate outlook after the hawkish hold

Reserve Bank of New Zealand’s (RBNZ) Governor Adrian Orr is speaking at the press conference after the May monetary policy announcement, reading the prepared remarks on the policy statement and responding to media questions.

Earlier on, the RBNZ decided to keep the policy rate steady at 5.50% for the seventh meeting in a row.

RBNZ press conference key quotes

Will take time for domestic inflation to decline.

Economy has lower potential growth rate, unsure if that is temporary.

Pleased with inflation expectations coming down, need to fall further.

OCR track is a central projection not an absolute prediction.

We had a real consideration on raising rates at this meeting.

About the RBNZ Press Conference

Following the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, the Governor delivers a press conference explaining the monetary policy decision. The usual format is a roughly one-hour presser starting with prepared remarks and then opening to questions from the press. Hawkish comments tend to boost the New Zealand Dollar (NZD), while on the opposite, a dovish message tends to weaken it.

Economic Indicator

RBNZ Press Conference

Following the Reserve Federal´s economic policy decision, the Reserve Bank Governor gives a press conference regarding monetary policy. His comments may influence the volatility of NZD and determine a short-term positive or negative trend.

Read more.

Next release: Wed May 22, 2024 03:00

Frequency: Irregular

Consensus: -

Previous: -

Source: Reserve Bank of New Zealand

The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by Governor Adrian Orr’s press conference.

This section below was published at 02:00 GMT following the Reserve Bank of New Zealand (RBNZ) policy announcements.

The Reserve Bank of New Zealand (RBNZ) board members decided to leave the Official Cash Rate (OCR) unchanged at 5.50%, following the conclusion of the May policy meeting on Wednesday.

The decision was widely as the market participants expected.

Summary of the RBNZ Monetary Policy Statement (MPS)

Monetary policy needs to be restricted.

Restrictive monetary policy has reduced capacity pressures in the new zealand economy and lowered consumer price inflation.

Annual consumer price inflation is expected to return to within the committee's 1 to 3 percent target range by the end of 2024.

Welcome decline in inflation in part reflects lower inflation for goods and services imported into New Zealand.

Components of domestic services inflation persists.

Wage growth and domestic spending are easing.

Weaker capacity pressures and an easing labour market are reducing domestic inflation.

Minutes of the RBNZ interest rate meeting

Members agreed they remain confident that monetary policy is restricting demand.

A further decline in capacity pressure is expected, supporting a continued decline in inflation.

Committee agreed that interest rates need to remain at a restrictive level for a sustained period to ensure annual headline cpi inflation returns to the 1 to 3 percent target range.

Committee noted that annual headline CPI inflation was expected to return to the target band in the december quarter of this year.

Domestic inflation has fallen more slowly than expected and headline consumers price index (CPI) inflation remains above the committee’s target band.

Committee also agreed that interest rates may have to remain at a restrictive level for longer than anticipated in the february monetary policy statement to ensure the inflation target is met.

The committee discussed the possibility of increasing the Oct at this meeting.

RBNZ updated economic forecasts

RBNZ sees official cash rate at 5.61% in September 2024 (pvs 5.6%).

RBNZ sees official cash rate at 5.54% in June 2025 (pvs 5.33%).

RBNZ sees TWI NZD at around 71.0% in June 2025 (pvs 71.5%).

RBNZ sees annual CPI 2.6% by June 2025 (pvs 2.4%).

RBNZ sees official cash rate at 5.4% in September 2025 (pvs 5.15%).

RBNZ sees official cash rate at 2.99% in June 2027.

NZD/USD reaction to the RBNZ interest rate decision

The New Zealand Dollar shoots through the roof in an immediate reaction to the hawkish RBNZ ’s hold. The NZD/USD pair currently trades around 0.6150, up 0.75% on the day. 

NZD/USD: 15-minutes chart

New Zealand Dollar PRICE Today

The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.

USD   -0.07% -0.08% 0.03% -0.19% -0.23% -0.89% -0.02%
EUR 0.07%   -0.01% 0.10% -0.12% -0.16% -0.82% 0.05%
GBP 0.08% 0.01%   0.12% -0.14% -0.13% -0.80% 0.07%
JPY -0.03% -0.10% -0.12%   -0.25% -0.27% -0.92% -0.05%
CAD 0.19% 0.12% 0.14% 0.25%   -0.03% -0.65% 0.17%
AUD 0.23% 0.16% 0.13% 0.27% 0.03%   -0.64% 0.23%
NZD 0.89% 0.82% 0.80% 0.92% 0.65% 0.64%   0.86%
CHF 0.02% -0.05% -0.07% 0.05% -0.17% -0.23% -0.86%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote). 

This section below was published on Tuesday at 21:15 GMT as a preview of the Reserve Bank of New Zealand (RBNZ) interest rate decision.

  • The Reserve Bank of New Zealand is widely anticipated to maintain the OCR at 5.50%
  • The language in the policy statement is expected to remain hawkish.
  • The New Zealand Dollar has room to extend its bullish momentum against the US Dollar. 

The Reserve Bank of New Zealand (RBNZ) will announce its monetary policy decision on Wednesday at 02:00 GMT and is widely expected to maintain the Official Cash Rate (OCR) at 5.50%.

Ahead of the announcement, the New Zealand Dollar (NZD) trades around the 0.6100 threshold against the United States Dollar (USD), consolidating last week's gains that drove NZD/USD to its highest level since mid-March.

What to expect from the RBNZ interest rate decision?       

Market participants anticipate an on-hold decision, but given that the RBNZ holds monetary policy meetings only seven times per year, each announcement could vary from the previous and trigger sharp market reactions. 

New Zealand policymakers look at quarterly inflation and employment data, and the latest available figures showed New Zealand's Consumer Price Index (CPI) increased 4.0% in the 12 months to the March 2024 quarter, according to figures released by Stats NZ, following a 4.7%  increase in the 12 months to the December 2023 quarter. It was the lowest reading since the second quarter of 2021, although inflation held above the central bank’s goal of keeping it within 1% to 3%.

Regarding employment, March quarter data from Stats NZ showed the unemployment rate surged to 4.3% from 4% in the previous quarter, while the seasonally adjusted number of unemployed people rose to 134,000 (up 10,000) over the quarter. As it happens with other major economies, the labor market gave tepid signs of loosening, which are still far away from enough to abandon the tight monetary policy. 

The central bank releases a Monetary Policy Review three times per year, the latest published in April 2024 and the next in mid-July, meaning the focus will be on the statement and any relevant change to the wording. Investors will pay close attention to Governor Adrian Orr's words, who previously noted that the local economy evolved broadly as anticipated by the committee, adding “core inflation and most measures of inflation expectations have declined, and the risks to the inflation outlook have become more balanced.” However, he also added that with headline inflation above the central bank’s target band, the Committee has limited ability to “tolerate upside inflation surprises.” 

With that in mind, policymakers are widely anticipated to maintain the hawkish tilt, as they have little room to manoeuvre. As a result, the NZD/USD could jump to fresh multi-month highs. 

How will the RBNZ interest decision impact the New Zealand Dollar?

The NZD/USD pair is undergoing a bearish correction, but the overall stance is bullish amid the broad US Dollar’s weakness. The Greenback has been on the back foot ever since market participants finally understood that the Federal Reserve (Fed) will maintain interest rates at record highs for most of 2024. 

Valeria Bednarik, FXStreet’s Chief Analyst, says: “NZD/USD has room to extend gains beyond the recent multi-month high at 0.6146, facing the next hurdle in the 0.6170 price zone, as the daily chart shows multiple relevant highs and lows in the area.  The pair can rally with no actual impact of the Committee’s wording, seen as hawkish, as previously noted. On the contrary, a dovish tilt could force NZD/USD to extend its bearish correction, with strong static support in the 0.6050 region.”

Bednarik adds: “Technical readings in the daily chart support the bullish case. NZD/USD develops above all its key moving averages, with the 20 Simple Moving Average (SMA) firmly advancing below the longer ones. A mildly bearish 100 SMA provides interim support around 0.6070 en route to the stronger one previously mentioned. Finally, technical indicators have barely retreated from near overbought levels, lacking downward strength, usually a sign of absent selling interest.”


The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.

The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.

Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.

In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.


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