Today’s Notable Sentiment Shifts
USD – The dollar rose on Wednesday, holding most of its earlier gains after minutes from the FOMC’s May meeting showed that most participants believed half-percentage-point rate increases would likely be appropriate in June and July.
Commenting after the minutes’ release, BMO Capital Markets noted that “as it conducts a pair of 50 bps rate hikes during the next two months, the Fed will likely keep its cards closer to its chest, waiting to see how the outlook and risks unfold before proffering what we expect will be another strong policy signal. That is, unless further worrisome inflation developments force the Fed to lay it cards on the table.”
RBNZ – New Zealand’s central bank delivered its fifth straight interest rate hike on Wednesday and signalled a much more aggressive tightening path as authorities seek to reduce the second-round effects of runaway inflation.
The RBNZ raised the OCR by 50 basis points to 2.0%, a level not seen since November 2016, while also revising its projections, expecting the cash rate to double to 4.0% over the next year and remain there into 2024.
Justifying its more aggressive stance, the RBNZ noted that “a larger and earlier increase in the OCR reduces the risk of inflation becoming persistent, while also providing more policy flexibility ahead in light of the highly uncertain global economic environment.”
Commenting after the minutes’ release, BMO Capital Markets noted that “as it conducts a pair of 50 bps rate hikes during the next two months, the Fed will likely keep its cards closer to its chest, waiting to see how the outlook and risks unfold before proffering what we expect will be another strong policy signal. That is, unless further worrisome inflation developments force the Fed to lay it cards on the table.”
RBNZ – New Zealand’s central bank delivered its fifth straight interest rate hike on Wednesday and signalled a much more aggressive tightening path as authorities seek to reduce the second-round effects of runaway inflation.
The RBNZ raised the OCR by 50 basis points to 2.0%, a level not seen since November 2016, while also revising its projections, expecting the cash rate to double to 4.0% over the next year and remain there into 2024.
Justifying its more aggressive stance, the RBNZ noted that “a larger and earlier increase in the OCR reduces the risk of inflation becoming persistent, while also providing more policy flexibility ahead in light of the highly uncertain global economic environment.”
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