The New Zealand Dollar firmed against the Euro on Wednesday after the Reserve Bank of New Zealand left its official cash rate without change at 5.5% during its August meeting and said it did not expect to begin rate cuts until the first half of 2025.
The RBNZ held the OCR at the current level for a second straight policy meeting, while matching market expectations.
“The committee agreed that the OCR needs to stay at restrictive levels for the foreseeable future to ensure annual consumer price inflation returns to the 1% to 3% target range,” the central bank said in its policy statement.
According to ASB Senior Economist Mark Smith, RBNZ policy makers have “signaled that they will not tolerate unwelcome stickiness in the inflation numbers.”
New Zealand’s annual headline inflation has eased from a three-decade high of 6.7% in recent months, but still remains elevated.
The RBNZ has delivered a total of 525 basis points of interest rate hikes since October 2021.
Meanwhile, in terms of macro data, market players will be paying attention to the second-quarter employment growth data for the Euro Area, industrial output figures for June as well as the second estimate of the region’s GDP in Q2, all due out at 9:00 GMT.
The Euro Area economy expanded at an annual rate of 0.6% in the second quarter, preliminary figures showed, after a 1.1% growth in Q1.
As of 7:13 GMT on Wednesday EUR/NZD was edging down 0.32% to trade at 1.8268. During the early phase of the Asian session, the minor Forex pair went up as high as 1.8376. The latter has been the pair’s strongest level since April 6th 2020 (1.8474).
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