RBNZ Turns Hawkish — Rate Hikes Back on the Table
RBNZ Governor Breman signaled monetary policy may need to become more restrictive, with rates potentially climbing above the earlier OCR forecast path, driven by NZD weakness, sticky wages, and the risk of an AI-linked market correction.
What we know
A flurry of First Squawk headlines captured a notably hawkish pivot from RBNZ Governor Breman. Key signals: rates likely to rise above the earlier OCR track (link), the committee weighed whether the OCR needs to move higher (link), NZD weakness poses inflation risks (link), wage growth hasn't reached levels compatible with the inflation target (link), and the RBNZ even considered a potential market correction in AI-linked investments (link). Additional tightening is expected over upcoming meetings (link).
How the story developed
RBNZ Governor Breman signaled monetary policy may need to become more restrictive, with rates potentially climbing above the earlier OCR forecast path, driven by NZD weakness, sticky wages, and the risk of an AI-linked market correction.
The RBNZ held its OCR at 2.75% in a surprise split 4-3 decision (vs. 3.00% expected), sending NZD down over 1% and AUD/NZD to its highest since 2013. Markets now watch today's FOMC with BofA calling for another hike.
By the Global Eye 24 desk, with AI assistance. Updated as the story develops. Spot an error? Write to corrections@globaleye24.com.