MUFG Research discusses its reaction to this week's RBNZ policy decision.
"After yesterday’s dovish RBA policy surprise when they slowed the pace of rate hikes to 25bps, market participants were braced for a similar dovish surprise from the RBNZ today. However, the RBNZ delivered a hawkish policy surprise by revealing that they considered raising rates by an even larger 75bps today but in the end delivered the fifth consecutive 50bps hike. In light of the potential lagged tightening impact from previous rate hikes, the RBNZ felt that it was more appropriate to deliver another 50bps," MUFG notes.
"Overall, the news that the RBNZ considered a larger hike today and their increased unease over the weaker New Zealand dollar are both offering more support for the kiwi in the near-term alongside the recent improvement in risk sentiment as market participants speculate over a dovish pivot from the Fed," MUFG adds.