Comments in Wheeler’s Q&A after the rate hike.
- Exchange rate pressures are a concern to the RBNZ
- Exchange rate high due to terms of trade
- Inflation pressures are starting to increase
- If inflation is faster than expected, will react
- Sees up to 125 basis points of hikes this year
That pace is much faster than the market is expected. At year end, the OIS market is pricing rates at just below 3.25% — 50 basis points above the current 2.75% level.
On that comment, NZD/USD has found a second wind and is up to 0.8512. Resistance is at last week’s high of 0.8523 followed by the October high of 0.8544.
NZDUSD
Update: More from Wheeler
- Wants to move early to contain inflation
- High share of exports in the dairy sector is something to think about, favors diversification
- Fair to say will see further rate increases over the next few months
