Market Divided on NZ Central Bank’s Next Move

The Reserve Bank of New Zealand (RBNZ) may hike rates by 25 basis points to head off inflationary pressures when it meets this Thursday, making it the first major central bank in the developed world to start normalizing monetary policy.

Official data on Jan. 21 showed the consumer price index rose 0.1 percent in the three months to Dec 31, confounding expectations for a 0.1 percent fall, and pushing the annual rate up to 1.6 percent – the highest since March 2012, Reuters reported. The central bank had forecast a fall of 0.2 percent.

However, those calling for a rate hike are in a minority and the consensus view points to an increase only in March. Expectations are evenly balanced with interest rate swaps implying a 48 percent probability of a rate hike.

A Reuters poll of 17 forecasters found only three banks – ANZ, HSBC and Citibank – ready to predict an increase this week.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza