FX.co ★ Kiwi Dollar Edges Higher on Inflation Risks

The New Zealand dollar inched up to around $0.593, holding near a one-week high, as investors reassessed the Reserve Bank’s policy outlook amid mounting global inflation risks. A recent surge in oil prices, driven by the ongoing conflict in the Middle East, has heightened concerns that inflationary pressures could strengthen. Analysts warned that inflation in New Zealand may not ease as much as the RBNZ expects, prompting speculation that monetary tightening may be brought forward. Financial markets are now almost fully pricing in a 25-basis-point rate hike in September, as well as assigning more than a 70% probability to an additional increase in December. This marks a notable shift from the central bank’s latest projections, which did not fully commit to even a single rate rise this year. Meanwhile, remarks from President Donald Trump earlier this week offered some respite to markets, after he characterized the Iran war as a “short-term excursion” that could conclude very soon.