⚡ RBNZ: Policy pace and July hike – TD Securities

The Reserve Bank of New Zealand is widely expected to deliver another 25 basis point rate hike next week, pushing the Official Cash Rate to 2.50 percent, according to TD Securities analyst Prashant Newnaha. The move would mark a continuation of the RBNZ’s tightening cycle as it battles persistent inflation pressures across the New Zealand economy.

Despite the anticipated increase, Newnaha warns that monetary policy will remain excessively accommodative, with the OCR still sitting well below the neutral rate level. This suggests traders should prepare for an extended hiking cycle ahead, as the central bank will need to maintain its aggressive stance to bring inflation under control and move rates into restrictive territory.

The New Zealand dollar, local bond markets, and carry trade positions will likely see increased volatility surrounding the announcement as investors reassess the pace and ultimate terminal rate of the RBNZ’s tightening campaign.

FXnCO Insight

Position for continued NZD strength and further rate hikes beyond July, as policy remains below neutral and the RBNZ’s inflation fight has further to run.

Source: FXStreet