The AUD/NZD Exchange Rate Approaches 1.1000 Following a Slight Decline in Kiwi Inflation to 6.9 Percent

The AUD/NZD pair is seeing a surge in demand following the release of Statistics New Zealand's annual inflation figure of 6.9 percent. The figures came in somewhat lower than expected at 7%, but the likelihood of another boost in the Reserve Bank of New Zealand's Official Cash Rate (OCR) remain high (RBNZ). Additionally, the quarterly kiwi Consumer Price Index (CPI) fell to 1.8 percent from a prior reading of 2%.

RBNZ Governor Adrian Orr increased the OCR by 50 basis points last week (bps). This was the RBNZ's fourth straight rate hike, bringing the OCR to 1.5 percent. The central bank stated in a statement that this was the largest rate hike in more than two decades, with the sole objective of minimizing inflation concerns. A larger-than-expected move by the RBNZ will provide the central bank with additional flexibility in future interest rate decisions. It's worth remembering that the RBNZ has been one of the most aggressive central banks in recent years, rapidly moving the grounded rates to neutral.

On the Australian front, the Reserve Bank of Australia's (RBA) officials have not identified any price pressures that would compel the institution to consider rate hikes. Meanwhile, investors are awaiting the release of the S&P Global Manufacturing PMI on Friday. A preliminary estimate of 57.8 is observed, compared to the earlier print of 57.7.

AUD/NZD