Investors price in a near-certain 25bps RBNZ rate increase in September amid persistent inflation pressures.
The New Zealand Dollar strengthened, with NZD/USD rising to 0.5960 in Asian trading, as markets bet on another Reserve Bank of New Zealand rate hike. Elevated inflation has reinforced expectations for a 25bps increase at the September 2 meeting, lifting the official cash rate to 2.75%.
Strategists note the upcoming RBNZ decision includes a fresh Monetary Policy Statement, with a back-to-back hike already fully priced in. Recent mixed domestic data has done little to shift expectations, as investors anticipate the central bank will maintain its tightening path.
The USD’s weakness also supported the pair, following the US Treasury’s plan to double buybacks for longer-dated bonds. Reports indicate up to $1 trillion may be drawn from the Treasury General Account to fund repurchases, adding pressure on the greenback.