RBNZ’s Breman says chances of a December rate hike are high after surprise hold at 2.75%
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Breman’s comments push back against the dovish reading of Wednesday’s hold and look aimed at steadying the New Zealand dollar, which she has said could add to imported inflation if it stays weak. Pricing of around 77% leaves room for further repricing toward a December hike if in
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4 itemsRBNZ’s Breman: more hikes likely at coming meetings, possibly into restrictive territory
RBNZ’s huge dovish surprise spells trouble for Kiwi dollar
The RBNZ's recent decision to maintain rates at 2.75% caught markets off guard, reflecting a 4-3 split vote that has significant implications for the Kiwi dollar. As outlined in the commentary, this dovish surprise indicates a potential for further downside risks for the NZD against its commodity peers despite hints at a December rate hike. Current trading around 0.5800 suggests skepticism among traders; the outlook remains clouded as the RBNZ emphasizes downside growth risks over inflation concerns, which could lead to a re-evaluation of the path for NZD/USD ahead. Per the full note, the volatility is heightened by the central bank's cautious stance amidst inflationary pressures expected to peak later this year.
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