On Wednesday, July 12th, the RBNZ meets at 03:00 am UK time. In the last RBNZ meeting at the end of May, the bank signaled that it has finished hiking interest rates. The RBNZ sees inflation returning to 2% by the end of 2025 and this helped fuel a move higher in the AUDNZD as the rate path of the RBA and the RBNZ diverged.

AUDNZD

The AUDNZD has been tracking lower recently after the last RBA meeting when the RBA decided not to hike rates but to skip a meeting. So, in order to see another clear directional move in the AUDZND investors will be looking for clear signs of a divergence to appear again.

So, what will be the surprise to look for from the RBNZ?

At the time of writing, short-term interest rate markets are pricing in a 92% chance of rates staying unchanged at 5.50%.

Longer-term interest rates see no rate changes this year, but a rate cut in summer 2024. So, the most obvious change to look for is if the RBNZ hints at sooner rate cuts. However, with core inflation still three times the RBNZ target, at 6.7% it may not come in this meeting.

Also, with food inflation still at 12.1%, and only slightly down from the peak this year at 12.5% in April, there is still more work to do. Conversely, we could see a move lower in the AUDNZD if the RBNZ signals one or two more rate hikes to come, so there is a two-way risk right now from the RBNZ meeting to be aware of.