FX.co ★ Kiwi Dollar Hovers Close to 7-Month Low

The New Zealand dollar is currently trading at approximately $0.564, its lowest point since early April. This decline is driven by a tepid inflation outlook, fueling expectations for further monetary easing by the Reserve Bank of New Zealand (RBNZ). Business inflation forecasts have shown that two-year projections remain stable at 2.28%, reflecting the central policy horizon, while one-year expectations have nudged slightly higher to 2.39%. Both figures fall within the RBNZ's target range of 1%–3%, indicating that price pressures are anticipated to remain subdued in the short term. Additionally, survey data reveals that a majority of respondents anticipate the central bank will lower interest rates in its upcoming meeting this month. The market generally expects a 25 basis point cut, bringing the rate down to 2.25%, although there is a minor 10% probability of a more significant 50 basis point reduction. This outlook is driven by increasing job losses and the economy's approach toward a potential second recession, factors that are exerting downward pressure on the New Zealand dollar, potentially wiping out its gains against the US dollar for this year.