- Darren Gibbs, chief economist at Deutsche Bank
The NZD/USD currency pair was dragged lower on Thursday, as the tapering of the U.S. stimulus programme and hints of a 2015 rate hike provided a significant boost to the U.S. Dollar. Even stronger-than-excepted GDP figure from New Zealand was not able to limit pair's depreciation.
New Zealand's economy is building up steam, bolstering the case of another rate hike from the RBNZ soon. The nation's gross domestic product posted a 3.1% growth in the final quarter of 2013 slowing from 3.5% a quarter earlier, however, outpacing analysts predictions for a 3.0% growth. On a quarterly basis, however, growth disappointed, as GDP slowed to 0.9% from third quarter's 1.2%. The reading is slightly ahead of the central bank's prediction of a 0.8% growth. Accelerating economic output underpins signs domestic economy is on the right track, and adds more pressure on the RBNZ to make a quick monetary policy response, as inflationary pressure will increase. A pickup in milk production, construction sector and stronger shipments mean that Kiwi economy will continue gaining momentum.
Last week the Reserve Bank of New Zealand raised its key refinancing rate to 2.75% from 2.5%, and according to latest estimates the OCR will increase by additional 2% over the next two years.
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