The Reserve Bank of New Zealand (RBNZ) left the Official Cash Rate (OCR) unchanged at 5.50%. NZD/USD dropped below the 0.59 level after RBNZ’s inaction. Economists at Danske Bank analyze the pair’s outlook.
The overall tone was to the dovish side
The RBNZ maintained the Official Cash Rate unchanged at 5.50% as widely anticipated.
RBNZ maintained its forward guidance unchanged, signalling that rate hikes are most likely already over, but that rates would remain at restrictive levels for 'a more sustained period of time'. Markets have speculated with a modest chance of RBNZ returning to hiking going forward, and hence the guidance was a slight dovish surprise, causing NZD/USD to decline following the meeting.
We maintain a modestly downward-sloping forecast profile, with 12M forecast at 0.57.
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