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New Zealand Q2 jobs seen as setting up RBNZ hikes in September or October

ING expects NZD/USD to hold near 0.585–0.590, with about 20–25 bps of tightening already priced for the Sept. 2 RBNZ meeting following the July hike.

Reported · Written up by our desk · Central Banks

ING’s Francesco Pesole says New Zealand’s upcoming Q2 labor data is likely to align broadly with the Reserve Bank of New Zealand’s May projections, which implied one to two rate hikes in the third quarter.

Pesole points to high-frequency indicators suggesting employment growth of about 0.1% quarter over quarter and unemployment rising from 5.3% to 5.4%, a setup that would keep the RBNZ hiking path in focus.

He favors a hike in September or October, with rising conviction for September, noting markets are currently pricing around 20–25 bps of additional tightening for the Sept. 2 meeting after the July hike.

ING also argues that expectations may be overstating the size of the tightening cycle, with 75 bps priced in by February, which could shift the narrative toward a smaller 50 bps “insurance” tightening cycle and, if so, support an earlier September move followed by a pause.

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