The NZD/USD currency pair was constrained within a tight daily range on Monday, trading not far from a 2-week high of 0.6076, ahead of the outcome of the RBNZ’s policy meeting on Wednesday.
The Reserve Bank of New Zealand is expected to keep its official cash rate intact at 2.25% at its February meeting.
In November, the RBNZ lowered its policy rate by 25 bps to 2.25%, bringing borrowing costs to their lowest level since mid-2022, due to significant spare capacity in the NZ economy and easing inflation pressures.
RBNZ Governor Ann Breman had said the official cash rate would likely stay without change for an extended period. This outlook assumed economic conditions evolved as expected.
Expectations for a restrictive RBNZ policy path have provided support to the kiwi dollar.
Meanwhile, in the US, annual headline consumer inflation has eased to 2.4% in January, the lowest level since May 2025, from 2.7% in December.
And, annual core CPI inflation has eased to 2.5% in January, the lowest rate since March 2021, from 2.6% in December.
Federal Reserve Bank of Chicago President Austan Goolsbee said last week that interest rates could be lowered, but highlighted that services inflation was still elevated.
Markets are now pricing in over 90% chance that the Fed will hold rates steady in March. Yet, investors are still pricing in 75 basis points of rate cuts this year, with the first likely in July.
The NZD/USD currency pair was last up 0.15% on the day to trade at 0.6043.
Trading volumes are likely to remain light on Monday, with markets in the US and China closed due to local public holidays.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
