RBNZ Rate Hike Expected, But Markets May Be Too Hawkish

ING's Francesco Pesole expects the Reserve Bank of New Zealand to raise rates by 25bp to 2.75% in its upcoming decision, with markets fully pricing in the move.

The current market expectation is for a more significant tightening, but ING believes this may be too hawkish unless the RBNZ significantly lifts its rate path.

ING anticipates softer CPI projections and sees NZD/USD slipping back below 0.5900 as the bank underwhelms hawkish expectations.