NZD/USD: Solid growth but limited RBNZ repricing – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad notes NZD/USD struggling to hold above 0.6000 as New Zealand’s ANZ business survey signals a solid GDP recovery. Despite improving activity, the RBNZ is expected to remain patient given spare capacity and a negative output gap. Markets price a 25 bps hike by year‑end, while the RBNZ projects steady rates at 2.25% through late 2026.

Growth improves while policy stays steady

"NZD/USD is struggling to sustain a move above 0.6000."

"New Zealand’s ANZ business activity outlook index ticked up in February and remains indicative of a solid recovery in GDP growth."

"Nevertheless, the RBNZ is in no rush to normalize rates because there is still significant spare capacity in the economy."

"New Zealand’s output gap is estimated to be -1.5% of potential GDP in Q4 2025."

"As such, the scope for RBNZ rate hike repricing in favor of NZD is limited."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)