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Reserve Bank of New Zealand to Continue Raising Interest Rates

3/23/2023 12:48 PM

The New Zealand dollar continues its poor dynamics against its competitors but against the US dollar, it rises slightly, trading at 0.6283.

Today, Reserve Bank of New Zealand chief economist, Paul Conway, in his speech at New Zealand Capital Market Forum in Wellington, clarified the regulator's decision to raise interest rates to 4.75%. Inflation is near a 30-year high of 7.2%, the official said and needs to be under more pressure to return to the target range of 1.0–3.0%, as the decline slowed due to floods caused by Cyclone Gabriel and the ongoing military conflict in Ukraine. It's not yet clear to officials whether price hike expectations are under control but the trend is positive, with credit card spending growing by 26.2% in February, compared with a 14.7% increase earlier. Conway added that if inflation does not decrease, then the RBNZ will have to continue tightening its monetary policy.

The US dollar is correcting, trading at 101.700 in the USD Index. The reaction to yesterday's decision by the US Federal Reserve on interest rates was expected: the rate corrected by 25.0 basis points to 4.75–5.00%, contrary to the opinion of most experts, who indicated that an increase in the value would exacerbate debt problems in the banking sector.

The trading instrument is correcting, forming a local Head and shoulders reversal pattern.

Technical indicators are ready to give a buy signal: fast EMAs on the Alligator indicator have almost reached the signal line, and the AO histogram entered the buy zone, forming rising bars.

Resistance levels: 0.6330, 0.6460. | Support levels: 0.6200, 0.6080.

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