NZD Slumps as RBNZ Hikes Rates Amid Crude Oil-Fueled Inflation
The New Zealand dollar (NZD) continued its downward trend after the Reserve Bank of New Zealand (RBNZ) raised interest rates to 2.75% in its second consecutive meeting.
This decision was made to combat inflation, which has remained above 2% for several years, with the headline Consumer Price Index (CPI) rising to 4.1% in the June quarter due to elevated crude oil prices.
The RBNZ stated that it expects core inflation to come down to the target range by 2027, but warned of weak income growth, job insecurity, and flat house prices affecting household spending and investment.
New Zealand's bond yields have risen significantly, with the ten-year yield jumping to 4.86%, its highest level since March 23rd this year, as investors expect the RBNZ to hike interest rates faster than the US Federal Reserve.