RBNZ Leads the Rat Race of Rate Hikes After Today’s 50 bps Hike - Forex News by FX Leaders
RBNZ not helping the Kiwi much

RBNZ Leads the Rat Race of Rate Hikes After Today’s 50 bps Hike

Posted Wednesday, July 13, 2022 by
Skerdian Meta • 2 min read

The Reserve Bank of New Zealand is leading the rate hike race among major western central banks, as it was the first to start it in October last year and was joined by other banks eventually. Inflation has been the reason for rate hikes according to central banks, but prices have been hiked for the reasons we know now and not because of a surging global economic activity, which would justify them.

Rate hikes are not having any impact on prices whatsoever, apart from making debt and mortgages more expensive. CPI (consumer price index) inflation has reached 6.9% YoY in New Zealand, which is the highest in decades. Nonetheless, the RBNZ raised rates for the fifth time to 2.50% today, which helped push the NZD higher, although we decided to open a sell signal in NZD/USD as this pair reached the 100 SMA (green) on the H1 chart. Now we expect this air to reverse down, since the pullback in the USD seems complete and the RBNZ post-rate hike price action seems to have ended.

NZD/USD Daily Chart – MAs Pushing the Price Lower

The downtrend continues as highs get lower

Interest Rate Decision from the RBNZ

  • RBNZ raises the official cash rate by 0.50% taking rates to 2.50%
  • The previous cash rate was 2.00%
  • The Committee agreed it remains appropriate to continue to tighten monetary conditions
  • The Committee agreed to continue to lift the OCR to a level where it is confident consumer price inflation will settle within the target range.
  • The Committee is comfortable that the projected path of the OCR outlined in the recent May Monetary Policy Statement remains broadly consistent with achieving its primary inflation and employment objectives – without causing unnecessary instability in output, interest rates and the exchange rate. Once aggregate supply and demand are more in balance, the OCR can then return to a lower, more neutral, level.

NZD/USD Live Chart

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