NZD/JPY plunges below 86.00 on a 50 bps OCR hike, higher than expected by the RBNZ
13.04.2022, 03:07

NZD/JPY plunges below 86.00 on a 50 bps OCR hike, higher than expected by the RBNZ

  • NZD/JPY has surrendered the majority of its Tokyo session’s gains on a jumbo rate hike by the RBNZ.
  • Against the forecast of a 25 bps OCR hike, the RBNZ has gone for a 50 bps elevation.
  • The RBNZ is moving its OCR to neutral rates to minimize the risk of the inflation mess.

The NZD/JPY pair has tumbled after recording an intraday high of 86.66 in the Asian session. The cross has sensed a decent correction after the Reserve Bank of New Zealand (RBNZ) pushed its Official Cash Rate (OCR) higher by 50 basis points (bps).  Currently, the OCR of the RBNZ has reached 1.50%.

Earlier, a 25 bps OCR hike was expected in the monetary policy announcement by the RBNZ Governor Adrian Orr. The street was expecting that the RBNZ will follow the streak of 25 bps OCR hike, which has been followed in the last three monetary policies announced in October 2021, November 2021, and February 2022. A firmer hawkish stance dictated by the RBNZ is indicating a swift mean reversion of OCR to its neutral rate. To minimize the risk of soaring inflation in the kiwi area, a tightening policy is a principal option and the RBNZ is capitalizing upon the same rigorously.

Going forward, investors will focus on the speech from the Bank of Japan (BOJ)’s Governor Haruhiko Kuroda, which will provide insights into the likely monetary policy action in the last week of April. While the kiwi docket will report the NZ Consumer Price Index (CPI) next week. A preliminary estimate for the quarterly CPI is 6.4% against the prior print of 5.9%.

 

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