RBNZ says rate increases likely needed in 2014

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Highlights of the RBNZ decision:

  • Rate held at 2.50%, as expected
  • RBNZ expects to keep official cash rate unchanged to the end of the year
  • NZ dollar high
  • Rate hikes depend on housing and construction
  • Lending limits to help slow house inflation
  • Sustained strength in the exchange rate that leads to lower inflationary pressure would provide the Bank with greater flexibility as to the timing and magnitude of future increases in the OCR
  • Full statement from the RBNZ

NZD/USD jumped to 0.8270 from 0.8230 on the headlines. The ‘rate hike in 2014′ has been said before so any substantial follow through is unlikely.

“Although we expect to keep the OCR unchanged in 2013, OCR increases will likely be required next year. The extent and timing of the rise in the policy rate will depend largely on the degree to which the momentum in the housing market and construction sector spills over into broader demand and inflation pressures.”

Author: Adam Button

Adam Button is the managing editor of ForexLive™. He was previously the chief currency strategist at XForex and has also worked with Intermarket Strategy. Adam believes there's an edge in knowing every tidbit of news. He was formerly the head of the markets team at the Canadian Economic Press and is a graduate of Ryerson University. Adam lives in Montreal, follow him on Twitter: @FX_Button.


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Adam Button


  1. Ciao Adam, I must sincerely thank you and Forexlive. I followed the Kivi after the Fed statement, entered 0,8232 and had TP at 0,8262. This because you had pointed out the situation of Kivi; without this indication I certainly didn’t notice the possibilities of the trade.
    Usually I prefer time frames daily or so, but sometimes it is worthy a good occasion….

  2. bro too much late to share….

  3. Adam, we sold cable this AM as I mentioned, then covered at $1.6007 (almost hit the bottom perfectly) , and bought cable there for a retrace up. Now we are trying to buy more cable on retrace down but trying to buy a cable retrace is like trying to “catch the wind” :) She really wants to bounce off of that $1.6000 bottom.

  4. I don’t know how often you guys at Forexlive get recognition for your calls that work out but good call on nzdusd. I already had my order in just above 0.82. I also got me some chf at the expense of usd but didn’t do quite so well with the entry level getting in @0.9008 just before the hourly close. Now I’m hoping to sit back & relax for a couple of weeks & watch these play out looking for usdchf to get down to 0.8754 :-)

  5. That’s a nice way to play it Langers. Well done.


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