Ex-RBNZ’s Grimes calls for 75bps hike, bond sales, NZD/USD regains 0.6700
17.02.2022, 02:43

Ex-RBNZ’s Grimes calls for 75bps hike, bond sales, NZD/USD regains 0.6700

In an MNI interview on Thursday, Arthur Grimes, a former Reserve Bank of New Zealand (RBNZ) Chairman and Chief Economist, said that he believes the central bank should hike the benchmark rate by 75-basis points (bps) at its next week’s policy meeting.

Key quotes

“Called on for the bank to begin selling some of the NZD50 billion in bonds purchased as part of the recent pandemic programme of Quantitative Easing.”

“Been urging the RBNZ to tighten policy for around 18 months, and that he considered current policy settings to be "ludicrous."

"To think of unemployment at 3.2%, with 6 % inflation, and if they increase rates by 25 basis points then the Official Cash Rate will be at 1%, it just doesn't make sense."

“25 basis points next week is "too little too late."

"They need to do a real big move now, say 75 basis points now and then another 50 and then another 50.”

“It was a "bizarre" situation for real interest rates to be negative with the economy overheating, even as house prices - up 27.4% last year according to research house CoreLogic - start to cool.”

Market reaction

The kiwi dollar is coming out as strongest amongst the G10 currencies so far this Thursday’s Asian trading, despite the mixed market mood.

NZD/USD is adding 0.39% on the day, trading at 0.6704, as of writing.

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