New Zealand Dollar weakens as economists project Official Cash Rate rising to 3.00%-3.25% within a year despite near-even split on July decision.
The New Zealand Dollar (NZD) fell against the USD, trading at 0.5690 in Asian hours, reversing two days of gains. The decline follows a 1.0% drop in the ANZ World Commodity Price Index for June, driven by easing Middle East tensions and lower oil prices.
NZIER economists remain divided on the Reserve Bank of New Zealand’s (RBNZ) July policy decision, creating short-term uncertainty. However, the shadow board unanimously agrees the Official Cash Rate (OCR) must rise to 3.00%-3.25% over the next 12 months. ANZ expects a 25 basis point hike to 2.50% next Wednesday.
The USD’s strength, fueled by expectations of multiple Federal Reserve rate hikes, further pressured the NZD/USD pair. ANZ argues persistent inflation risks and a weaker NZD justify immediate RBNZ action to avoid market disruption.