The New Zealand dollar has grown a bit against the US dollar in response to the RBNZ decision. The current quote is 0.6221. However, the medium-term trend remains as it was: the NZD needs a better foothold than the Reserve Bank of New Zealand can possibly give it. At today’s meeting the RBNZ made an anticipated decision to raise the interest rate by 50 base points. Crediting price is growing slowly and systematically, as has been promised by the RBNZ.
According to the comments of the chairperson, a recession is expected in the economy in the course of 12 months, so that the demand will decrease seriously. In the upcoming weeks, prices for certain categories of goods are expected to grow over the country, most likely because of the Gabrielle cyclone. In the RBNX, they think that increasing interest on deposits will make people start saving. And this, in turn, will weaken inflation in the future.
In Q1, inflation might amount to 7.3%, which for New Zealand is really high and dangerous. The voice of the regulator turned out to be cautious and worried, which fundamentally affects the NZD. People would like the RBNZ to be more optimistic but this is one of the few regulators that call things by their names.