ING expects the Reserve Bank of New Zealand (RBNZ) to keep the policy rate unchanged at 2.25% at its upcoming meeting. It also expects no new forecasts and only limited guidance.<\/p>\n
Market pricing implies little tightening in the first half of the year, with 65bp of rate rises priced by year end. The report says communication from RBNZ Governor Anna Breman has been dovish so far.<\/p>\n
The New Zealand dollar has underperformed the Australian dollar this year, with weaker support from industrial commodities than Australia. The report says this pattern may continue unless the RBNZ delivers a hawkish surprise at the press conference.<\/p>\n
Looking back to early 2025, we recall the Reserve Bank of New Zealand holding a cautious stance with rates at 2.25%. This dovish tone contributed to the New Zealand dollar lagging behind the Australian dollar. The market at the time was only pricing in gradual tightening for the year.<\/p>\n
The situation has since evolved significantly, as we are now seeing different economic pressures. New Zealand’s latest Q1 2026 inflation figures came in hotter than expected at 4.8%, now outpacing Australia’s 4.2% reading. This persistent inflation is forcing the central bank into a more aggressive position.<\/p>\n
Consequently, the RBNZ has shifted from the dovish communication we saw last year to a much more hawkish policy. The Official Cash Rate now stands at 5.50%, a stark contrast to the levels seen in 2025. The market is currently pricing in at least two more hikes before the end of this year.<\/p>\n
We are also seeing a reversal in the commodity dynamics that previously favored Australia. Global Dairy Trade prices, a key export for New Zealand, have surged over 15% since January, while iron ore prices have softened. This provides a fundamental tailwind for the NZD against the AUD.<\/p>\n
For derivative traders, this suggests a shift in strategy over the coming weeks. We believe positioning for continued NZD strength against the AUD is favorable, potentially through long NZD\/AUD call options. Volatility may increase around the next RBNZ meeting, making options a useful tool to manage risk while capturing upside from any hawkish surprises.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" ING predicts RBNZ will hold rates at 2.25%, offer limited guidance; markets price hikes, NZD lags AUD.<\/p>\n","protected":false},"author":87,"featured_media":0,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50464","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t