The New Zealand dollar climbed today after the Reserve Bank of New Zealand kept its key Official Cash Rate (OCR) unchanged, but mentioned that an interest rate hike probably will be required next year.
The RBNZ kept its main interest rate at 2.5 percent at today’s policy meeting. Reserve Bank Governor Graeme Wheeler said in the accompanying statement that the outlook for the global economy “remains mixed”. He also complained about the strength of the currency:
Despite having fallen on a trade-weighted basis since May 2013, the exchange rate remains high. A lower rate would reduce headwinds for the tradables sector and support export industries.
Yet the statement was more hawkish than was expected as it mentioned a possible interest rate hike:
OCR increases will likely be required next year. The extent and timing of the rise in policy rates will depend largely on the degree to which the momentum in the housing market and construction sector spills over into broader demand and inflation pressures.
NZD/USD rose from 0.8072 to 0.8122 (trading near the highest level since August 19) and NZD/JPY advanced from 80.63 to 81.18 (the strongest price since May 31) as of 22:30 GMT today.
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