MUFG Research discusses its reaction to this week’s RBNZ policy decision.
“After yesterday’s dovish RBA policy surprise when they slowed the
pace of rate hikes to 25bps, market participants were braced for a
similar dovish surprise from the RBNZ today. However, the RBNZ
delivered a hawkish policy surprise by revealing that they considered
raising rates by an even larger 75bps today but in the end delivered the
fifth consecutive 50bps hike. In light of the potential lagged
tightening impact from previous rate hikes, the RBNZ felt that it was
more appropriate to deliver another 50bps,” MUFG notes.
“Overall, the news that the RBNZ considered a larger hike
today and their increased unease over the weaker New Zealand dollar are
both offering more support for the kiwi in the near-term alongside the
recent improvement in risk sentiment as market participants speculate
over a dovish pivot from the Fed,” MUFG adds.
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