RBNZ Rate Hike Still on the Table Despite Soft Labor Market

TD Securities analysts have revised their view on the New Zealand labor market, which they now see as softening. However, this does not deter them from predicting a rate hike by the Reserve Bank of New Zealand (RBNZ) in its next meeting.

The bank's economists argue that despite a cooling labor market, inflation remains above the central bank's target range, and it is likely to look through short-term weakness. The RBNZ's projections indicate a gradual return to the 1-3% target by late 2025.

TD Securities expects the central bank to hike interest rates by 25 basis points at its next meeting, citing persistent domestic inflation pressures. A rate hike would likely provide near-term support for the New Zealand Dollar (NZD), which has been sensitive to shifts in RBNZ expectations.