The RBNZ maintains interest rates, and the AUD/USD moves ahead of US CPI

RBNZ Holds Rates, AUD/USD Breaks Out Ahead of US CPI

The Reserve Bank of New Zealand (RBNZ) held its official cash rate (OCR) at 2.0% today, as expected by economists. The RBNZ said that it was "broadly satisfied" with the current level of monetary policy, and that it would continue to monitor the economic outlook before making any further decisions.

The decision to hold rates was accompanied by a slightly more dovish tone from the RBNZ, which said that it was "not currently forecasting" that the OCR would need to rise above 3.0%. This suggests that the RBNZ is less concerned about inflation than some other central banks, and that it is willing to allow the economy to grow at a slower pace in order to avoid overheating.

The decision to hold rates had a mixed impact on the New Zealand dollar. The NZD/USD initially fell after the announcement, but it then recovered and broke out above the 0.6900 level. This suggests that markets are becoming more confident in the New Zealand economy, and that they are expecting the RBNZ to hold rates for the foreseeable future.

The breakout in the NZD/USD came ahead of the release of US CPI data later today. Economists are expecting US CPI to rise to 8.8% year-on-year, which would be the highest level in 40 years. If CPI comes in above expectations, it could put pressure on the US Federal Reserve to raise interest rates more aggressively. This could weigh on the US dollar and support the NZD/USD.

Key Takeaways

• The RBNZ held rates at 2.0%, as expected.
• The RBNZ said that it was "broadly satisfied" with the current level of monetary policy.
• The RBNZ is not currently forecasting that the OCR will need to rise above 3.0%.
• The NZD/USD broke out above the 0.6900 level.
• US CPI data is due later today.

What to Watch For

• US CPI data
• The RBNZ's next monetary policy announcement
• The outlook for the New Zealand economy
• The global economic outlook