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- NZD/USD: RBNZ policy outcome to providing only temporary support for the Kiwi – MUFG
NZD/USD: RBNZ policy outcome to providing only temporary support for the Kiwi – MUFG
The New Zealand Dollar has strengthened modestly. The main trigger for the Kiwi’s rebound has been the RBNZ’s latest policy update. However, economists at MUFG Bank expect the NZD bounce to be short-lived.
RBNZ disappoints expectations for a lower terminal rate peak
“The RBNZ decided to raise their key policy rate by a further 50 bps to 4.75% in line with the consensus.”
“The RBNZ still believes that it has work to do to get rates into more restrictive territory to bring inflation back to their target. The RBNZ’s updated forward rate guidance continued to signal that they plan to raise the policy rate to a peak of 5.50% this year. The timing of reaching the terminal rate was pushed back a little from Q3 to Q4.”
“The RBNZ is more inclined to slow the pace of hikes further by delivering smaller 25 bps hikes at upcoming policy meetings. One final larger 50 bps hike can’t though be completely ruled out in April.”
“At best we see today’s RBNZ policy outcome providing only temporary support for the Kiwi which has been one of worst performing G10 currencies so far this year.”
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