MUFG Research discusses its response to this week’s RBNZ coverage determination.
“After yesterday’s dovish RBA coverage shock once they slowed the
tempo of charge hikes to 25bps, market individuals had been braced for a
comparable dovish shock from the RBNZ right this moment. However, the RBNZ
delivered a hawkish coverage shock by revealing that they thought-about
elevating charges by a good bigger 75bps right this moment however ultimately delivered the
fifth consecutive 50bps hike. In gentle of the potential lagged
tightening influence from earlier charge hikes, the RBNZ felt that it was
extra acceptable to ship one other 50bps,” MUFG notes.
“Overall, the information that the RBNZ thought-about a bigger hike
right this moment and their elevated unease over the weaker New Zealand greenback are
each providing extra assist for the kiwi within the near-term alongside the
current enchancment in threat sentiment as market individuals speculate
over a dovish pivot from the Fed,” MUFG provides.