RBNZ hikes interest rate

Note: This section contains information in English only.
Source: Dukascopy Bank SA
On October 6, the Reserve Bank of New Zealand made a rate statement. The bank hiked interest rates for the first time in seven years. Namely, the base rate was increased from 0.25% to 0.50%. Moreover, the bank stated that it would gradually remove monetary stimulus to battle inflation.

Quoting the statement: " The Monetary Policy Committee agreed to increase the Official Cash Rate (OCR) to 0.50 per cent. Consistent with their assessment at the time of the August Statement, it is appropriate to continue reducing the level of monetary stimulus so as to maintain low inflation and support maximum sustainable employment.

The level of global economic activity has continued to recover, supported by accommodative monetary and fiscal settings, and rising vaccination rates enabling a relaxation of mobility restrictions. While economic uncertainty remains elevated due to the prevalent impact of COVID-19, cost pressures are becoming more persistent and some central banks have started the process of reducing monetary policy stimulus."

Statement on Monetary Policy

Monetary Stimulus Further Reduced - Official Cash rate raised to 0.50 percent

On the announcement, the NZD/UD currency exchange rate jumped 25 base points in three minutes following 01:00 GMT. However, afterwards, a decline began. In a span of 45 minutes, the currency exchange rate declined 48 pips, as it approached the 0.6930 level.

On a larger scale, the rate tested the resistance of the 0.6980 level, which has kept the rate down since October 4. Afterwards, the rate began a decline, which appeared to be finding support in round exchange rate levels like the 0.6930 and 0.6920.

Initial Reaction

Larger scale situation

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