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RBNZ: rate hike on the horizon

On Thursday the New Zealand dollar showed a strong recovery versus the US dollar as the Reserve Bank of New Zealand sounded quite hawkish. It promised to leave the cash rate at a record low of 2.5% until the end of 2013, but noted that a tightening would likely have to come at some point.

ANZ: We still expect the rate hike in the early 2014. The precise date is somewhat secondary with the real issue being at what pace and regularity the OCR ends up being lifted.

ASB Bank: There was a lot more emphasis on the potential inflation spillover from construction costs and housing market. We still expect the RBNZ to raise rates in March 2014.

If the analysts’s predictions come true, New Zealand could be the first developed nation to begin tightening interest rates.

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