RBNZ surprises, could Fed or BoC be next?
TLT•New Zealand's central bank unexpectedly held interest rates steady after two previous hikes, sending the kiwi dollar sharply lower. Markets priced less than a 20% chance of a Fed hike and more than an 80% chance of a Bank of Canada hike.
1. Central bank surprises
New Zealand's central bank unexpectedly held interest rates steady overnight, with some policymakers choosing to wait and assess how the economy evolves after two previous rate hikes. Its guidance suggested further hikes remain on the radar, but the kiwi dollar headed for its biggest one-day drop since April 2025.
2. Fed and BoC outlook
Markets priced less than a 20% chance of a rate hike from the Federal Reserve at the end of its two-day meeting. For the Bank of Canada, markets priced more than an 80% chance of a hike, which RBC strategists called “stretched”; they said a modest hawkish hike was the most likely outcome, though a hawkish hold could not be ruled out.
