RBNZ Survey Sparks Fears of Interest Rate Volatility in NZD

The New Zealand dollar has been remarkably calm in August, but this tranquility may be short-lived. Volatility levels are at their lowest in two decades, and Kiwi interest rate markets expect further tightening from the Reserve Bank of New Zealand (RBNZ). The RBNZ's Survey of Expectations, released today, is a crucial indicator that has historically influenced interest rates.

The key metric to watch is two-year inflation expectations. A significant deviation could jolt the Kiwi out of its current funk. Ahead of the release, swaps markets are heavily priced for further RBNZ tightening.