The GBP/NZD currency pair rose sharply on Wednesday, after the Reserve Bank of New Zealand delivered a less hawkish message than some had expected at its February policy meeting.
The central bank kept its official cash rate unchanged at 5.5%, in line with market consensus, while extending the rate pause for a fifth consecutive meeting.
The RBNZ toned down its hawkish stance, as it lowered its forecast cash rate peak to 5.6% from a prior forecast of 5.7%.
“Core inflation and most measures of inflation expectations have declined, and the risks to the inflation outlook have become more balanced,” the RBNZ said in a statement.
RBNZ Governor Adrian Orr said during a press conference following the policy decision that while committee members had discussed a rate hike, “there was very strong consensus that the official cash rate right now is sufficient.”
RBNZ policy makers noted they were aware that headline inflation remained above the target range of 1% to 3% and continued to expect interest rate cuts to begin in mid-2025.
The RBNZ Board also said it expected GDP growth in the near term to be subdued after local data prints were mixed in recent months, as the economic outlook in China, New Zealand’s largest trading partner, remained historically weak.
Currency Pair Performance
As of 8:11 GMT on Wednesday the GBP/NZD currency pair was gaining 0.89% to trade at 2.0731.
The minor Forex pair has extended a pullback from last Wednesday’s 6-week low of 2.0374.
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