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RBNZ to hike by 25bp tomorrow prompting mean reversion in AUDNZD
Since the last meeting in November, developments in the labour market and inflation have surprised to the upside. Inflation at 5.9% is almost twice the top of the RBNZ’s 1-3% target band and is yet to peak with high oil prices and a soft currency translating into $3/litre petrol prices in some parts of the country. There is a non-negligible chance of a 50bp hike; however, with the housing market softening and the Omicron surge just getting started, the RBNZ is expected to opt for 25bp. Russia’s decision today to send “peacekeeping” troops into two separatist republics in eastern Ukraine this morning is ... (full story)