The RBNZ raised the official interest rate (OCR) by 25 basis points to 5.5% today in a split decision (5-2) and signaled that the picnic cycle is over. The bank noted that the policy will remain restricted for some time to come and sees reductions from the back half of 2024. More details in the points above. NZD/USD was lower on the news. when i update its sitting below 0.6200. Yields are also down over NZ 2 years, down 30 basis points on update. This sent AUD/USD down as well, but only by a few pips. Below 0.6600 after only a 25-pip range or so.
Earlier in the session, we had first quarter retail sales from New Zealand. These prices have fallen again, after falling in the fourth quarter of last year, suggesting that New Zealand may indeed be heading into recession.
US debt ceiling talks have stalled, with no further meetings scheduled for Tuesday evening US time.
Aside from the New Zealand dollar and the Australian dollar, the major foreign currencies have been very quiet indeed.
All Asian stock markets fell after a weak lead from Wall Street:
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Japan’s Nikkei 225 -1%
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China Shanghai Composite -0.8%
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Hang Seng in Hong Kong -1.1%
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Cosby in South Korea -0.1%
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Australia S&P/ASX 200 -0.5%
