Traders See New Zealand Policy Error Risk in Rate-Hike Bet

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Swap traders are bracing for a possible interest-rate increase by the Reserve Bank of New Zealand in the coming months. Overnight indexed swap contracts are pricing in about a 50% chance RBNZ Governor Adrian Orr will lift the cash rate by a quarter point to 5.75% in the first half of the year. Traders had priced in a better than 60% chance of an RBNZ hike before data on Tuesday showed New Zealand inflation expectations sank to a 2-1/2-year low this quarter. Talk of a New Zealand rate hike gained momentum after ANZ Bank economists last week forecast the central bank would increase rates twice this year. Over in the US, rates traders have slashed wagers on a March rate cut from the Fed to a roughly 10% chance, after fully pricing in one at end-2023, amid signs that the US economy is holding up better than expected.

#InterestRates #ReserveBankOfNewZealand #RateHike #InflationExpectations #UsEconomy

https://finance.yahoo.com/news/traders-bet-policy-error-zealand-023907345.html