As predicted the RBNZ raised their interest rate 50 basis points from 4.25% to 4.75% Wednesday but defied expectations of a signal for a lower peak. In line with recent weather events there’s still room to move higher than the 5.5% initial top with policy guidance still required at the current pace. The New Zealand Dollar (NZD) pushed up to 0.6250 from 0.6200 levels against the US Dollar (USD) but has failed to hold here falling back to lows. The Fed minutes highlighted a tight labour market, risk in the Ukraine War helping to keep inflation elevated, on the whole economic risks are still tilted to the downside. US GDP fell to 2.7% for the fourth quarter 2022 compared to 2.9% predicted for the fourth quarter in a row, the figure has come in light as unemployment claims unexpectedly fell in the month of December. The cross sits at the key support around 0.6200 as I write, we think this should hold into the close.
The current interbank midrate is: NZDUSD 0.6232
The interbank range this week has been: NZDUSD 0.6196- 0.6262