The New Zealand dollar rose at the Reserve Bank of New Zealand’s (RBNZ) Oct. 20 reference fixing, while Kiwibank commentary put the chance of another interest rate increase this month at about 80%.
The RBNZ’s Oct. 20 reference fix, taken at 9 p.m. ET on Oct. 19 (2 p.m. NZDT on Oct. 20), was $0.56645 per New Zealand dollar, up from $0.56565 at the previous fix. The readings are snapshots taken at a set time, rather than daily closing prices. The latest move followed a rise at the previous day’s fixing.
FXStreet reported a later quote near $0.5690 during European trading. That intraday observation and the RBNZ’s published fix reflect different points in the trading day.
Kiwibank senior dealer Hamish Wilkinson based his estimate on overnight index swaps ahead of the RBNZ’s Oct. 28 policy review. His figure appeared in Kiwibank market commentary; it was an estimate of market expectations, not an announced rate decision.
Kiwibank’s economists were less convinced that an increase would come in October, although they described the move as fully priced in the commentary. They forecast annual inflation of 4% for the September quarter, with the data due before the policy review.
The RBNZ raised its official cash rate by 25 basis points to 2.75% on Sept. 2, after an increase in July. Another move of the same size would bring the rate to 3% and mark a third consecutive increase. The central bank says a higher cash rate can raise loan costs and improve returns on savings.
Consumer prices rose 4.1% in the 12 months through the June quarter, Stats NZ reported, above the RBNZ’s medium-term inflation target of 1% to 3%. The central bank attributed much of the increase to fuel prices linked to the Middle East conflict. It said higher fuel costs had reduced households’ spending power and that future rate decisions would depend on economic data.
Stats NZ is scheduled to release September-quarter inflation figures Oct. 22. The RBNZ’s next policy review is set for Oct. 28.
