RBNZ Hikes Rates Amid Rising Inflation Concerns

The Reserve Bank of New Zealand (RBNZ) raised interest rates for the second consecutive meeting, bringing the benchmark rate to 2.75%. This decision was made as the country's inflation remains above the 2% target level.

New Zealand's inflation has been driven by elevated crude oil prices, which have risen due to the resumed kinetic activity between the US and Iran. Brent and West Texas Intermediate (WTI) crude oil prices are currently at $95 and $90 respectively, pushing up transportation costs and inflation in the coming weeks.

The RBNZ's decision to hike rates has led to a significant increase in New Zealand bond yields, with the 10-year yield jumping to 4.86%, its highest level since March 23rd this year. This is consistent with the rising trend of US bond yields, which have also increased due to expectations of further interest rate hikes by the Federal Reserve.

The NZD/USD exchange rate has continued its downward trend, reaching a new low of 0.5835, down by over 2.6% from its highest point in August. The pair has broken below key support levels, including the 50-day moving average and the Major S/R pivot point of 0.5860.