The New Zealand dollar climbed to around $0.599, rebounding from a two-week low, as a weaker US dollar amid rising trade risks lent support. The move followed President Donald Trump’s announcement that he would raise global tariffs from 10% to 15% after the Supreme Court struck down his “reciprocal” tariff measures.
However, the kiwi’s advance was capped by diminishing expectations of a near-term interest rate hike. Reserve Bank Governor Anna Breman noted that the economy still has room to recover this year without stoking excessive inflation, with price pressures expected to ease gradually. This points to only a limited need for aggressive policy tightening.
The central bank recently left the cash rate unchanged and reiterated that monetary policy will remain supportive as inflation moves gradually toward the midpoint of the target band. Breman also indicated that a rate increase later in 2026 remains a possibility, though markets have not fully priced it in.
At the same time, stronger-than-expected Q4 retail sales showed the economy retained momentum late in 2025, reinforcing the case for a potential rate hike later this year.
