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NZD/USD extends rebound after RBNZ rate hike
The RBNZ raised the Official Cash Rate 25 basis points to 2.5% and signaled more stimulus withdrawal may be needed to return inflation to target.
The New Zealand dollar extended its rebound on Thursday, pushing NZD/USD to around 0.5730, up 0.56% on the day, as the Reserve Bank of New Zealand turned more hawkish than expected, according to FXStreet.
The RBNZ lifted its Official Cash Rate by 25 basis points to 2.5% at its July meeting, and emphasized that further withdrawal of monetary stimulus could be required to bring inflation back to target on a sustainable basis. In the central bank’s projections, inflation is expected to peak at 3.9% in the second quarter before easing toward the 2% midpoint by mid-2027.
FXStreet also pointed to a limit on the NZD’s upside from softer China inflation data, with China’s National Bureau of Statistics reporting June CPI rose 1.0% year over year, down from 1.2% and below the market consensus.
Meanwhile, FXStreet said renewed US and Iran tensions have strengthened safe-haven demand, providing support to the US dollar and potentially capping gains in NZD/USD in the near term.