 New Zealand Dollar surged sharply higher following RBNZ's unexpectedly hawkish rate decision. While OCR was left unchanged, the central bank signaled the increased possibility of another rate hike this year and delayed projected timing of the first rate cut to the second half of 2025. However, Kiwi quickly gave back some of its gains after RBNZ Governor Adrian Orr tempered expectations in his press conference. Orr emphasized that the OCR track is a only central projection, not a guaranteed outcome, and expressed satisfaction that inflation expectations are declining. Market attention now turns to the upcoming UK inflation data. Headline CPI is anticipated to drop significantly from 3.2% to 2.1% in April, while core CPI is expected to decrease from 4.2% to 3.6%. BoE has indicated that a rate cut this summer is possible, but the timing will depend on the data. Currently, markets are pricing in almost a 100% chance of a rate cut in August and a 50/50 chance in June. Any upside surprises in today's inflation figures would strengthen the case for a later rate cut... |
