New Zealand stalls rate hike over COVID-19 concerns
The central bank of New Zealand postponed its planned rate hikes on Wednesday. This came as policymakers shifted their focus in the wake of newly imposed lockdowns due to a surge in COVID-19 infections. However, the bank remains in anticipation of a raise before the end of the year.
The Reserve Bank of New Zealand (RBNZ) maintained its official cash rate at a low record of 0.25% despite a flourishing economy and analysts projecting a hike. Some noted Governor Adrian Orr even considered a 50 basis point rate hike.
Yujiro Goto, chief fx strategist of Nomura Securities said the RBNZ chose a wait-and-see approach amid the fresh virus outbreak, but it is still considering a rate hike in the fourth quarter.
Policymakers expected cash rate at 0.50% by the end of the year, 1.5% by mid next year, and over 2% by end of 2023.
New Zealand would have been the first country to increase rate in the Asia-Pacific had it pushed through with its plan on Wednesday.