New Zealand: Kiwi central bank turning hawkish
|Summary
- The Reserve Bank of New Zealand (RBNZ) is the latest central bank preparing for a shift to less accommodative monetary policy, with this week's monetary policy announcement including a notable change in policy bias.
- The RBNZ held its Official Cash Rate steady at 0.25% and kept the limit for its Large Scale Asset Purchase program at NZ$100 billion. However, in publishing conditional projections for the Official Cash Rate for the first time since the pandemic begin, the central bank signaled that interest rates could begin to rise from the second half of 2022, and that it might not fully utilize its NZ$100 billion purchase limit.
- Today's announcement represents upside risk to our NZD/USD exchange rate forecast, which currently anticipates the NZ dollar gaining to $0.7700 over the medium-term.
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