The New Zealand dollar climbed to $0.585, its highest level in more than six weeks, after stronger-than-expected inflation data reinforced expectations of further monetary tightening by the Reserve Bank of New Zealand (RBNZ).
Annual inflation quickened to 4.1% in the second quarter from 3.1% in the first, beating both market forecasts of 4.0% and the RBNZ’s latest projection of 3.9%. This was the highest reading since the fourth quarter of 2023 and remained well above the central bank’s 1–3% target range.
The hotter-than-expected data strengthened market conviction that the RBNZ will deliver another rate hike in September, with investors also pricing in further increases in either October or December, and an additional move in February next year.
The outlook for higher domestic interest rates has continued to support the kiwi, allowing it to outperform many of its peers even as global risk sentiment has deteriorated amid escalating tensions in the Middle East.
