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RBNZ preview: Fiscal spending argues for a hawkish 25bp hike
Last week, New Zealand’s government announced large spending plans and a set of more encouraging economic forecasts. All this has radically changed the picture for the Reserve Bank, which should hike by 25bp to 5.50% this week and may revise its peak rate projections to 6.00% given new inflationary risks. NZD can keep outpacing AUD on policy divergence. Fiscal boost puts pressure for another hawkish surprise At the April meeting, the Reserve Bank of New Zealand hiked by 50bp, taking the official cash rate to 5.25%, and the latest rate projections suggest it should deliver one last 25bp hike this week. A 25bp hike ... (full story)