The RBNZ meeting, which was held last night, delivered little in the way of surprises, in terms of the meeting itself. The asset purchase program was maintained at $ NZD 100 billion and the new Funding for Lending Programme was launched. The bank projected that the Official Cash Rate would remain at 0.25% until March next year. So, there is no change, right? Nope.

Slightly More Hawkish Projections?

Digging into the details, we see better revisions for inflation. It is expected to rise to 0.9% in Dec 2021 versus the previous forecast of 0.3%. Employment was projected to weaken further in the near term, but then pick up. Most committee members agreed that the risks to their baseline scenarios were less skewed to the downside than they appeared to be earlier in the year. With the positive vaccine news this week, it is hardly surprising, that the RBNZ is feeling more upbeat.

The NZD/USD has been bullish since the beginning of this month, and last night, after the RBNZ meeting, this pair jumped 100 pips higher, off the 50 SMA (yellow) on the H1 chart. Now the price has retraced back down and the 20 SMA (gray) is holding as support at the moment. We decided to open a buy forex signal here, since the sentiment has turned quite bullish for the NZD, and now we are waiting for the bullish trend to resume after this pullback.