The Reserve Bank of New Zealand (RBNZ) increased its benchmark rate for the first time in seven years and signalled further tightening. Economists at HSBC expect the next 25bp hike to come in November 2021, with further hikes due next year. What’s more, they still look for modest NZD weakness against the USD over the next 12 months.
“Our central scenario is the RBNZ lifts its cash rate to 0.75% in November 2021, with further hikes through next year to 1.50% by end-2022, but the Delta variant and transitioning to ‘living with’ the virus remain clear near-term downside risks to domestic growth.”
“We see NZD/USD moving in a narrow range over the near-term, albeit with modest NZD weakness against the USD over the next 12 months.”
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