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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.


(source: tradingeconomics.com)


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)