AUD/NZD skids below 1.0700 as RBNZ raise interest rates by 25 bps

• AUD/NZD skids below 1.0700 as a rate hike by RBNZ has underpinned the kiwi against the aussie.
• A 25 bps interest rate hike is in line with the market consensus.
• Kiwi’s inflation at 5.9% is significantly higher than the average range of 1-3% in the last two decades.

The AUD/NZD pair has slipped below 1.0700 as the Reserve Bank of New Zealand (RBNZ) raised its benchmark rates by 25 basis points (bps). The cross has remained in the positive territory since the first tick of the Asian session. The asset has rebounded after the successful retest of Tuesday’s low around 1.0700. However, it has eased its Wednesday’s gains now and heading for more weakness.

Should investors be cognizant that the RBNZ has raised its borrowing rates by 0.75% in the last six months? And, New Zealand’s central bank was already expected to come with one more rate hike of 25 bps for Wednesday’s monetary policy meeting as per the market consensus.

To contain the soaring inflation in the kiwi region, the RBNZ highly needed to bank upon the interest rate hike as the last resort. The latest print of kiwi’s inflation at 5.9% is significantly higher than the average range of 1-3% in the last two decades. However, the geopolitical jitters amid the Russia-Ukraine tussle have jeopardized the monetary policy decision-making for various central banks.

Meanwhile, the Australian Bureau of Statistics has reported the quarterly and yearly Wage Price Index data in the Asian session. The quarterly Wage Price Index has remained in line with the estimates at 0.7% but above the previous print of 0.6% while the yearly one comes lower than the market consensus of 2.4% at 2.3% but higher than the previous figure of 2.2%.