NZDUSD rose after the RBNZ’s decisions but couldn’t keep up. The New Zealand Dollar rose pretty much against the USD in the morning but couldn’t keep the positive momentum later. The current quote for the instrument is 0.6788. During its April meeting, the Reserve Bank of New Zealand raised the benchmark interest rate by 50 basis points, up to 1.5% to fight inflation. Average market expectations implied a 25-point hike, up to 1.25%.
In the comments that followed, the regulator said that it was going to continue strengthening its monetary policy – it would take the path of least resistance and implement more significant rate hikes now instead of later. By raising the rate by 50 basis points, the RBNZ will have a more flexible monetary policy amid global uncertainty. This strategy is quite interesting although very unusual for the present situation.
The regulator is planning to focus on keeping high inflation under control and prevent it from becoming a long-term trend. The NZD improved quite well right after the regulator’s decisions, but not for long. The Kiwi lost its positive momentum and is now under the USD’s pressure again.