22.01.202603:59:39UTC+00Kiwi Dollar Hits 4-Month High Ahead of Inflation Data

The New Zealand dollar appreciated to approximately $0.585, marking a four-month peak, as investors anticipate the fourth-quarter Consumer Price Index (CPI) report, expected on Friday, to gather further insights into the Reserve Bank of New Zealand's (RBNZ) policy direction. Forecasts indicate annual inflation may rise to 3%, which is at the upper threshold of the RBNZ’s 1-3% target band. Should the inflation figures exceed expectations, it could bolster the argument for increasing interest rates. Recent economic indicators have revealed a strengthening recovery in New Zealand’s economy, supporting the perspective that the RBNZ might commence tightening monetary policy later this year. While the likelihood of a policy change in February appears negligible, there is now over a 50% probability of a rate hike by July. In parallel developments, Prime Minister Luxon announced on Wednesday that a national election is scheduled for November 7. Additionally, the New Zealand currency gained from an uplift in global risk sentiment following US President Donald Trump's retraction of tariff threats against eight European nations and the announcement of reaching a "framework of a future deal" concerning Greenland.