On May 24, the New Zealand Fed announced its interest rate decision until May 24.。Following the decision, the New Zealand Fed announced a 25 basis point increase in its official cash rate to 5.5%。It is worth noting that according to the New Zealand Fed's forecast, the official cash rate will not rise again and will be lowered from the third quarter of 2024.。

The rate hike is the 12th consecutive rate hike by the New Zealand Fed since October 2021。However, the bank issued its first forecast in this tightening cycle, suggesting that the rate cut will occur in the second half of next year。In addition, according to the minutes of the Monetary Policy Committee meeting, members had discussed today the option of keeping interest rates unchanged directly on this resolution, but according to the vote, the committee voted 5-2 to raise interest rates anyway。

The New Zealand Fed's dovish forecast sharply exceeded market expectations.。On the one hand, most economists had previously issued forecasts suggesting that the New Zealand Fed would maintain its tightening bias and open the door to further rate hikes if necessary;.3% pull down to 6.7 per cent, but that is still far from the bank's 2 per cent target.。On the employment front, New Zealand's unemployment rate remains low at 3.4%, the risk of rising inflation remains。

Previously, the New Zealand Fed's governance of inflation was more aggressive than the Fed's: if the rate hike is taken into account, the bank's rate hike will come to 525 basis points, or even more than the Fed's 500 basis points, and the shift in the New Zealand Fed's monetary policy cycle also indicates that it will shift to rely on the lag effect of higher credit costs in the future。

After the announcement of the interest rate decision, the New Zealand dollar short-term start selling mode, plummeted more than 1%, and continued to lower in the day。

The Reserve Bank of New Zealand says residential consumption and residential construction are slowing and house prices are back to more sustainable levels。More generally, demand for goods and services is also declining, as is willingness to invest。According to business reports, the main factor currently constraining economic activity is insufficient demand, not labor shortages.。Nevertheless, according to the bank's forecast, a limited economic slowdown is expected and New Zealand will experience only a slight recession in the second and third quarters of this year.。

The bank also said the Committee is confident that with interest rates remaining at strict levels, the level of consumer inflation will fall to the target range of 1-3 per cent per annum.。In addition, the bank expects New Zealand inflation to continue to fall from peak levels, with the inflation expectations indicator falling as well.。

Prashant Newnaha, senior interest rate strategist at TD Securities Asia Pacific, said the real surprise to the market was that the New Zealand Fed directly announced the completion of its interest rate hike mission。It is clear that the bank can now sit back and wait for its previous interest rate hike efforts and recession expectations to show results, automatically pulling down inflation。

Sharon Zollner, ANZ's chief New Zealand economist in Auckland, also said that the New Zealand Fed no longer seems to think that only a massive slowdown in the economy can pull down inflation, and that this relatively mild recession would be enough to consistently reduce inflation, which is a relatively good result.。

As of press time, New York plunged 1.75%, currently trading at 0.61392 near, the lowest day of 0.61313, the lowest since April 28。

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