The risk of an RBNZ rate hike "is real"

<p>We had the Reserve Bank of New Zealand policy announcement earlier</p><ul><li><a href="https://www.forexlive.com/centralbank/rbnz-leaves-cash-rate-unchanged-at-55-as-expected-20231129/" target="_blank" rel="follow" data-article-link="true">RBNZ leaves cash rate unchanged at 5.5%, as expected</a></li></ul><p>and a jump for the kiwi$</p><ul><li><a href="https://www.forexlive.com/centralbank/rbnz-policy-meeting-nzdusd-surges-20231129/" target="_blank" rel="follow" data-article-link="true">RBNZ Policy Meeting: NZD/USD surges</a></li></ul><p>Westpac response (in brief): </p><ul><li>RBNZ … was more hawkish on future prospects. </li><li>RBNZ’s projections continue to reflect the risk of further increases in the OCR in 2024. An easing cycle looks quite some time off.</li><li>RBNZ’s projections for the OCR were revised 10bp higher to a peak of 5.69% in September 2024, implying around a 75% chance of a further 25bp rate hike.</li><li>The projections imply a gradual easing of policy from the first half of 2025. </li><li>The long-run neutral OCR was adjusted up 25bp to 2.5%. </li><li>… more tightening may be required to ensure inflation returns promptly to target</li></ul><p>Bolding is mine. </p><p>NZD/USD update:</p>

This article was written by Eamonn Sheridan at www.forexlive.com.