The New Zealand dollar hovered around $0.565 on Monday, its highest level in three weeks, as investors awaited this week’s third-quarter inflation report for fresh guidance on the Reserve Bank’s policy outlook. Data released today showed the services sector expanded for a fourth consecutive month in September, though only modestly, while the August trade deficit widened more than expected, underscoring a mixed economic backdrop.
Markets are largely pricing in a third consecutive rate hike later this month, which would raise the policy rate to 3%. Last week, RBNZ Chief Economist Paul Conway said the late-October decision remained open, noting that the central bank still viewed a higher official cash rate as the most likely next step, but had yet to determine the timing. As a result, the upcoming inflation report will be pivotal in assessing whether further monetary tightening is warranted.
