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RBNZ Raises Rate to Highest since Jan. 2009; NZD Surges

The Reserve Bank of New Zealand increased its Official Cash Rate (OCR) for the 3rd month in a row, from 3.00% to 3.25%. Economists had expected the rate hike, but after 2 in a row, the room for a third one was questionable. After all in 2010, the bank stopped raising rates after 2 straight rate hikes to 3.00%. This latest rate hike moved the OCR to the highest since Jan. 2009.


Graeme Wheeler, governor of the RBNZ noted that economic expansion has been considerable and that inflationary pressure is a concern which the rate hike was based on.

The NZD/USD rallied sharply. It is extending a previous bullish breakout. The bullish outlook has the 0.8695-0.87 resistance in sight in the near-term, and the 0.88 exposed in the short-term. A break below 0.8517 however could be a sign of weakness, and that the RBNZ's rate hikes are priced in.

(nzdusd 4h chart)