NZD higher on the Reserve Bank of New Zealand’s two notable hawkish surprises

While the 25bp rate hike was expected, say WPAC:

There were, however, two notable hawkish surprises.

  • First, the OCR forecast peak was increased significantly, from 2.6% to 3.35%. We had expected an increase to 2.80%.
  • Second … said LSAP bond holdings would be reduced by a combination of not reinvesting maturity proceeds (a passive form of reduction) and selling NZGBs directly to the NZDM at a rate of $5bn per year starting in July (an active form of reduction). We had expected the reduction to be of the passive form.

On the decision to hike by 25bp rather than 50bp, the minutes did say “many members saw this as a finely balanced decision”.

Governor Orr speaks at his news conference at 0200 GMT.

NZD/USD has gained ground on the RBNZ today:

nzd 23 February 2022

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