As expected, the RBNZ lifted the Official Cash Rate by 50bp from 2.5% to 3.0% and the statement is signalling further tightening ahead.

NZD/USD has rallied by some 35 pips to a session high of 0.6365.

RBNZ quarterly statement

• Conditions need to continue to tighten.
• Sees OCR at 3.69% in December this year (up from its previous projection at 3.41%).
• Sees OCR at 4.1 in September 2023 (from 3.95%).
• Sees OCR at 4.1% in December 2023 (from 3.95%).
• Sees OCR at 3.65% in September 2025.
• Core consumer price inflation remains too high and labour resources remain scarce.
• Range of indicators highlight broad-based domestic pricing pressures.
• Agreed that further increases in the ocr were required in order to meet their remit objectives.
• Committee agreed that maintaining the recent pace of tightening remains the best means.
• Agreed that domestic inflationary pressures had increased since may and to further bring forward the timing of ocr increases.
• Resolute in its commitment to ensure consumer price inflation returns to within the 1 to 3 percent target range.
• House prices have steadily dropped from high levels since November last year, and are expected to keep falling over the coming year towards more sustainable levels.

Markets will be tuning into Governor Adrian Orr’s press conference later in the day. 

About the RBNZ interest rate decision

RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD.