NZD/USD hit a new high above the 0.6200 threshold in the Asian session, as New Zealand's central bank (RBNZ) looks to raise its interest rate again.

The New Zealand dollar exceeded the 0.6200 threshold against the US dollar in Asian session trading on Wednesday (29/November), as the Central Bank of New Zealand (RBNZ) looks to raise interest rates again. NZD/USD then fell to around 0.6147 at the start of the New York session due to the release of superior US GDP data, but the market continues to favor a more hawkish RBNZ stance.

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The RBNZ policy meeting this morning decided to keep New Zealand's benchmark interest rate (OCR) at 5.5%. However, they raised next year's interest rate projection to more than 5.6%. The RBNZ also pushed back the projected first-rate cut from the first quarter of 2025 to mid-2025.

The RBNZ emphasized that "excess demand and continued inflationary pressures are a concern, given the high level of core inflation. If inflationary pressures are stronger than anticipated, the OCR may need to be increased further".

The RBNZ statement was more hawkish than market expectations. This is because a number of analysts had feared that the RBNZ would take steps to cut interest rates next year.

"The RBNZ left the cash rate unchanged at 5.5% today. No surprises there. But their hawkish tone certainly surprised," says Jarrod Kerr, Chief Economist at Kiwibank. "Despite a number of data points which would have suggested the end of the tightening cycle, the RBNZ have kept the door wide open for another hike. Lifting the OCR track to 5.69% by September 2024, signalling a 75% chance of a hike," says Kerr.

Sharon Zollner, ANZ Chief Economist, is skeptical of the RBNZ's hawkish stance. She suspects that this is just rhetoric from the RBNZ to counter speculation of interest rate cuts that could loosen its policy. However, he also acknowledged that there are concerns that if inflation declines as expected, the RBNZ may need to raise interest rates again.

Market participants will continue to weigh the RBNZ's interest rate outlook next year. Speculation around the issue affects NZD/USD along with other crucial issues such as world commodity prices, China's economic conditions, and the Fed's interest rate outlook.