June Forex Market Update (week 2)

The Reserve Bank of New Zealand raised the official cash rate for a third time while keeping its track for interest rates broadly in line with its March projections, suggesting the bank sees no need to pause in removing stimulus in an accelerating economy. The New Zealand dollar jumped three quarters of a cent against the US dollar following the announcement.

Governor Graeme Wheeler raised the OCR to 3.25 per cent, as expected, saying as inflationary pressures are expected to increase, “it is important that inflation expectations remain contained and that interest rates return to a more neutral level.”

The extremely hawkish nature of the currency rate statement also hinted of further rates to come in the not too distant future.