Westpac Sees RBNZ Hold on July 8, Kiwi Under Pressure on Rate Differentials
Westpac expects the Reserve Bank of New Zealand to hold rates at its July 8 meeting, but a lower projected OCR peak and widening rate differentials against the US and Australia keep the kiwi under downside pressure.
Westpac expects the Reserve Bank of New Zealand to hold the official cash rate at its July 8 meeting, a call that removes near-term event risk for currency markets. The bank also revised down its projected OCR peak and softened its tightening path relative to its outlook just a few months ago, a moderately dovish shift for rates markets.
The decision to hold rates at the July meeting, likely unanimous, shifts attention to the September Monetary Policy Statement as the next live decision point. Westpac still expects two further rate hikes between September and December, but the lower peak and pared-back path suggest the tightening cycle is losing momentum. For foreign exchange traders, the more actionable signal is Westpac's continued downside view on the kiwi, driven by widening rate differentials against the US and Australia. This view sits somewhat at odds with the bank's more constructive growth and inflation revisions, creating two-sided risks around the timing of any kiwi recovery. Traders can check NowPrice's FX page for current NZD/USD and NZD/AUD pricing.
Looking ahead, the July 8 meeting itself is expected to be a low-drama event, but the September MPS will be crucial for the kiwi's direction. Any hawkish surprise in the RBNZ's forward guidance could support the kiwi, while a dovish tilt would reinforce the downside pressure from rate differentials. Key data releases, including New Zealand employment and inflation figures, will also shape expectations ahead of the September meeting.