The Reserve Bank of New Zealand kept the interest rate unchanged at 5.5% on Wednesday, surprising the markets as policymakers stated that risks to inflation expectations have become more balanced. The decision by the Reserve Bank of New Zealand was in line with expectations but challenged some market bets for an interest rate hike, making the central bank more in line with its global counterparts, most of whom have called for an end to interest rate hiking cycles. The path and comments of the Reserve Bank of New Zealand’s interest rate expectations were also slightly more pessimistic than anticipated by some traders, leading to selling in the New Zealand dollar and a rise in bond yields.
The bank lowered the expected peak interest rate to 5.6% from the previous expectations of 5.7%, easing its hawkish stance. The Reserve Bank of New Zealand stated, “Core inflation has eased, and most measures of inflation expectations have fallen, and the risks to inflation expectations have become more balanced.”
Reserve Bank of New Zealand Governor Adrian Orr stated in a press conference that while the committee discussed raising interest rates, “there was a very strong consensus that the official cash rate is sufficient at present.” In a Reuters survey of 28 economists, everyone except one expected the Reserve Bank of New Zealand to leave the interest rate at its highest level in 15 years for the fourth consecutive meeting.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
