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MNI STATE OF PLAY: RBNZ Hikes 50bp, No Slowing Down in 2022

MNI (PERTH)
MNI (Perth)

The RBNZ's hawkish consideration of a 75bp hike stiffens the odds of another 50bp increase in its final meeting of the year in November.

The Reserve Bank of New Zealand considered a 75bp hike at its October meeting, signalling its determination to sustain the pace of monetary tightening this year as it lifted rates 50bps to 3.5% as expected on Wednesday.

It was the eighth consecutive hike by the RBNZ since Oct 2021, delivering a cumulative 325bps of tightening and lifting the Official Cash Rate to its highest level since early 2015. The hawkish slant to the decision led to a modest repricing of the Bank's likely terminal rate, which is forecast to be around 4.5% by mid-2023. Another 50bp - possibly the final hike of that size - is priced in for when the Bank gathers for its final meeting this year on November 23, when it will also release its Monetary Policy Statement.

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The Reserve Bank of New Zealand considered a 75bp hike at its October meeting, signalling its determination to sustain the pace of monetary tightening this year as it lifted rates 50bps to 3.5% as expected on Wednesday.

It was the eighth consecutive hike by the RBNZ since Oct 2021, delivering a cumulative 325bps of tightening and lifting the Official Cash Rate to its highest level since early 2015. The hawkish slant to the decision led to a modest repricing of the Bank's likely terminal rate, which is forecast to be around 4.5% by mid-2023. Another 50bp - possibly the final hike of that size - is priced in for when the Bank gathers for its final meeting this year on November 23, when it will also release its Monetary Policy Statement.

Keep reading...Show less