NZ Economist’s bold call opens opportunity in NZD?

  • ANZ’s Zollner foresees RBNZ lifting rates to 6%, potentially impacting NZD/USD and aiming for a yearly high.
  • Zollner and Westpac’s Eckhold clash on rate forecasts; Zollner anticipates a hike, while Eckhold leans towards a “higher for longer” scenario, expecting rates to stay at 5.50% until 2025.

Sharon Zollner, chief economist at ANZ (the country’s largest retail bank), says the RBNZ may lift interest rates to 6% at its next meetings in February (27th) and April. Zollner accounts for 25 basis points in each meeting.  

This could potentially open some targets to the upside in the NZD/USD, including a yearly high for the pair. On its way up, we might want to see little hesitation in the recent consolidation band of 0.62130 and 0.62611 before this eventuates though.   

Zollner pointed out that a series of “small but unwelcome data surprises” was enough to kickstart the hiking cycle again. She mentioned that it’s not uncommon for central banks to resume hiking after a break, citing three instances when the Reserve Bank did so after the 2007 Global Financial Crisis.  

Obviously Zollner’s prediction is only that, a prediction (and perhaps biased at that?). On the flip side, Kelly Eckhold, the chief economist at Westpac (New Zealand’s second-largest retail bank), disagreed with the market predictions of another rate hike, countering Zollner’s hawkish stance. Eckhold interpreted the new data to suggest a “higher for longer” scenario, expecting rates to stay at 5.50% until 2025. Which might not exactly be bad news for the upside prospects of the NZD/USD too. 

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