With Chinese markets closed now for the long Lunar New Year holidays it was over to New Zealand today for some fireworks.

ANZ New Zealand dropped a huge out-of-consensus call into the mix, forecasting a Reserve Bank of New Zealand rate hike at the Bank’s next policy meeting on February 28, and also for another at the following meeting on April 10. The current RBNZ Official Cash Rate (OCR) is 5.5%, the two 25bp rate hikes that ANZ expect would take it to 6%. NZD/USD jumped higher, from around 0.6095 to be sitting close to its session high as I post

From across the ditch (the Tasman Sea that separates New Zealand from Australia) we had Reserve Bank of Australia Governor Bullock speaking in parliament, before the House of Representatives Standing Committee on Economics. Bullock didn’t add anything different to her comments earlier in the week after the RBA’s first policy meeting of the year. The main message was that while the inflation rate has been coming lower there is still some way to go to meet the midpoint of the central bank's target range of 2-3%. Bullock said that the Bank has not ruled out another rise in interest rates, should that be necessary. She highlighted:

  • "while we don’t necessarily need services inflation to be at the midpoint of the 2–3 per cent range to meet our target, we do need it to be quite a bit lower than it currently is."

I think its very safe to say there is no prospect of an imminent cash rate cut from the Bank.

Also speaking in parliament (Japan’s) today was Bank of Japan Governor Ueda. Ueda backed up the comments from his Deputy Uchida on Thursday who said that financial conditions in Japan will remain easy even after the BOJ puts an end to its negative rate policy.

While the New Zealand dollar rose during the session elsewhere for other major-trade FX its was mainly very quiet and tightly range-bound.

nzd rbnz rate hike forecast 09 February 2024 wrap 2