The Reserve Bank of New Zealand met on Tuesday to decide on its official cash rate and has lifted rates by the max expected, 50 basis points to 1.5% to combat inflationary headwinds pertaining to the Omricon disruptions and the Ukraine crisis.
NZD/USD has rallied to test the resistance of 0.6890s.
NZD/USD daily chart
Prior to the decision:
The M-formation is a reversion pattern on the daily chart and the neckline is located near the highs of Tuesday's business in the 0.6890s where it meets a 38.2% Fibonacci retracement level.
0.6820 on the downside and 0.6890 on the upside are critical levels that likely guard breakout territories for the days ahead.
On the release:
The price is stalling at 0.69 the figure five minutes after the data with a high made of 0.6901 so far.
RBNZ says:
Appropriate to continue to tighten monetary conditions.
Agreed ‘path of least regret’ to increase by more now, rather than later.
RBNZ says will remain focused on ensuring that current high consumer price inflation does not become embedded into longer-term inflation expectations.
RBNZ says monetary tightening brought forward.
RBNZ says remained comfortable with the outlook for the OCR as outlined in their February.
RBNZ says moving the OCR to a more neutral stance sooner will reduce the risks of rising inflation expectations.
RBNZ says larger move now also provides more policy flexibility ahead in light of the highly uncertain global economic environment.
RBNZ minutes:
Committee noted that the OCR is stimulatory at its current level.
Members agreed that this ‘stitch in time’ approach is consistent with near-term financial market pricing.
Committee agreed that their policy ‘path of least regret’ is to increase the OCR by more now, rather than later.
Members noted that inflation is above target and employment is above its maximum sustainable level.
Committee confirmed that further increases in the OCR are needed in order to meet their mandate.
About the RBNZ
RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD.
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