Kiwi Falls Towards July Low as RBNZ Mirrors Fed Hike
The New Zealand dollar has fallen towards its July low following the Federal Reserve's decision to hike interest rates.
The Reserve Bank of New Zealand raised its cash rate to 2.75% on September 2, marking its second increase since July, due to inflation reaching 4.1% in the second quarter primarily driven by fuel prices.
The central bank stated that the next move is likely a pause in October and another rise in December, mirroring the Fed's direction from a lower starting point.
The gap between New Zealand's 2.75% cash rate and the Fed's new midpoint of 3.875% is more than a percentage point, which doesn't help the Kiwi.
Furthermore, the Fed's own forecasts indicate that US growth will be strong this year and next, with no cuts in sight for 2027.