RBNZ Governor says central bank policy now officially contractionary

Ross J Burland FXStreet

Reuters reported that New Zealand's central bank governor said on Thursday that the central bank cash rate was officially contractionary as it tries to bring down inflation.

"We are sorry that New Zealanders are being buffeted by significant shocks and inflation is above target. As we've said before, inflation is no one's friend and causes economic costs," Reserve Bank of New Zealand governor Adrian Orr told a committee at parliament.

NZD/USD update

The Kiwi is higher having made a fresh high for the current upswing, and regaining a 0.6250 area while it was approaching its strongest levels in nearly three months. The Reserve Bank of New Zealand delivered a supersized 75 basis point rate hike to get ahead of inflation.

That hike was the largest since the RBNZ introduced the OCR in 1999 and brought the policy rate to a 14-year high of 4.25%. Meanwhile, in the statement, it was explained that the central bank's board expects the cash rate to peak at 5.5% in September 2023 according to its latest forecasts. Additionally, a dovish set of Federal Reserve minutes helped.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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