RBNZ Hikes Rate 25 bps to 2.50%, NZD Strengthens – MUFG
The Reserve Bank of New Zealand raised its policy rate by 25 basis points to 2.50%, its first hike since May 2023. The New Zealand Dollar rallied on the decision, but MUFG sees only two more increases by March.
The Reserve Bank of New Zealand (RBNZ) delivered a 25-basis-point rate hike, bringing the official cash rate to 2.50% — the first increase since May 2023. The move was widely anticipated, with overnight index swaps (OIS) having fully priced in the hike as well as expectations for further tightening.
According to MUFG analyst Derek Halpenny, the NZD strengthened following the announcement, interpreting the decision as a signal of continued but moderate tightening. However, MUFG forecasts only two additional rate increases through March, suggesting the market may be overpricing the pace of future hikes.
The rate decision underscores the RBNZ's efforts to curb inflation while balancing growth risks. Currency markets will now focus on upcoming economic data and any forward guidance from the central bank.
Source: FXStreet Forex News