New Zealand dollar weakens toward $0.59 on hawkish Fed tone
New Zealand dollar weakened toward $0.59, its lowest level since Aug. 19, as investors favored the US dollar after Federal Reserve Chair Kevin Warsh’s Jackson Hole speech.
The New Zealand dollar weakened toward $0.59, touching its lowest level since August 19, as investors favored the US dollar following Federal Reserve Chair Kevin Warsh’s first Jackson Hole speech, despite expectations that the Reserve Bank of New Zealand will continue tightening policy this year.
In his first major speech since becoming Fed chair in May, Warsh warned that inflation has not meaningfully slowed and said policymakers need to be confident that underlying price pressures are easing; otherwise, the central bank still has “work to do.” In New Zealand, economists widely expect the RBNZ to raise its cash rate by another 25 basis points at its September meeting, with around two-thirds anticipating at least one more hike.
This could take the policy rate to 3% or higher by December.
The outlook follows the RBNZ’s first rate increase in more than three years in July, when policymakers indicated that further tightening may be needed to bring inflation back to target.