RBNZ - How high can hawks fly? NZDUSD
At its first meeting of the year, the RBNZ as expected, raised the Official Cash Rate by 25bp to 1% and reiterated that further hikes would be necessary.
Share this:
Providing a series of hawkish surprises, the RBNZ noted that the decision between a 25bp and 50bp hike was “finely balanced”, and it increased the OCR peak forecast by 75bp, from 2.6% to 3.35% and pulled forward expected hikes.
In the lead up to today's meeting, the market was priced for the terminal rate to be pushed higher to just under 3%, still well above the RBNZ’s estimate of neutral at 2%.
There was still more ammunition for the hawks - the RBNZ said its Large-Scale Asset Purchases Program (LSAP) would be reduced (Quantitative Tightening) via a combination of not reinvesting maturity proceeds and selling $5bn per year, starting in July, directly into the New Zealand debt market.
The final paragraph of the statement reaffirmed the hawkish bias and the RBNZ’s determination to tackle inflation, now almost twice the top of the RBNZ’s 1-3% target band. Notably, the RBNZ does not have headline inflation back in the band until mid-2023, and it is not expected to return to the middle of the band until early 2025.
“The Committee agreed that further removal of monetary policy stimulus is expected over time given the medium-term outlook for growth and employment, and the upside risks to inflation.”
Turning to the currency market, the NZDUSD outperformed overnight, adding 0.5% to close at .6735 and following the RBNZ’s hawkish surprise, yields are considerably higher across the curve.
This provides the backdrop for the NZDUSD to continue to grind higher, initially into a layer of resistance at .6800/20 before a push towards the January .6890 high. A break and daily close below .6700s would negate the bullish bias.
Source Tradingview. The figures stated areas of February 23rd, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
How to trade with City Index
You can trade with City Index by following these four easy steps:
- Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
Providing a series of hawkish surprises, the RBNZ noted that the decision between a 25bp and 50bp hike was “finely balanced”, and it increased the OCR peak forecast by 75bp, from 2.6% to 3.35% and pulled forward expected hikes.
In the lead up to today's meeting, the market was priced for the terminal rate to be pushed higher to just under 3%, still well above the RBNZ’s estimate of neutral at 2%.
There was still more ammunition for the hawks - the RBNZ said its Large-Scale Asset Purchases Program (LSAP) would be reduced (Quantitative Tightening) via a combination of not reinvesting maturity proceeds and selling $5bn per year, starting in July, directly into the New Zealand debt market.
The final paragraph of the statement reaffirmed the hawkish bias and the RBNZ’s determination to tackle inflation, now almost twice the top of the RBNZ’s 1-3% target band. Notably, the RBNZ does not have headline inflation back in the band until mid-2023, and it is not expected to return to the middle of the band until early 2025.
“The Committee agreed that further removal of monetary policy stimulus is expected over time given the medium-term outlook for growth and employment, and the upside risks to inflation.”
Turning to the currency market, the NZDUSD outperformed overnight, adding 0.5% to close at .6735 and following the RBNZ’s hawkish surprise, yields are considerably higher across the curve.
This provides the backdrop for the NZDUSD to continue to grind higher, initially into a layer of resistance at .6800/20 before a push towards the January .6890 high. A break and daily close below .6700s would negate the bullish bias.
Source Tradingview. The figures stated areas of February 23rd, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
Related tags:
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD Q4 2026 Outlook: Euro at a Crossroads as Fed, ECB Tighten 9 25 2026
EUR/USD enters Q4 at a pivotal inflection point as competing Fed-ECB policy paths and persistent inflation risks collide with major technical support.
USD/JPY Q4 2026 Outlook: Hawkish Fed Pricing Clashes With Intervention Risk
The year-end tug-of-war is clear: hawkish Fed pricing supports USD/JPY, while intervention risk limits the upside.
Japanese Yen Forecast: USD/JPY 4% Rally Challenges Post-Intervention Downtrend 9 24 2026
USD/JPY momentum has shifted sharply higher, putting a major resistance confluence in focus as U.S. and Japanese event risk builds.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.