The Reserve Bank of New Zealand (RBNZ) again kept the interest rate at 5.5% (the fifth meeting in a row), but trimmed the forecast peak for rates. The RBNZ signaled that the rate will remain at the current level for a long period of time.
"Interest rates should remain at a restrictive level for a long period of time to ensure that inflation returns to the target range of 1%-3%. However, core inflation and most indicators of inflation expectations have decreased. In general, the risks to the inflation outlook were more balanced than at the time of the November meeting," the Central Bank said.
The bank lowered its peak interest rate forecast to 5.6% from 5.7%, softening its hawkish stance and effectively reducing the risk of further policy tightening. Currently, markets are predicting the first rate cut only in November, but the Central Bank is signaling rate cuts only in early 2025.
Meanwhile, the head of the RBNZ said that politicians discussed raising the rate, but "there was a very strong consensus that the interest rate is right now sufficient."
Experts said that the tone of the Central Bank's statements was not as hawkish as it could have been, since the risks are now seen as more balanced, in contrast to the upward bias noted in the November statement. Against this background, the NZDUSD fell by 1.02% to 0.6107, reaching its lowest level since February 16.