SYDNEY, May 26 Reuters The New Zealand dollar jumped on Wednesday after the countrys central bank projected that it might hike interest rates as early as September next year, even as it emphasised patience was needed on policy.
The kiwi dollar climbed 0.9 to 0.7290, extending a rally from a 0.7158 low at the start of the week. The surge broke layers of resistance at 0.7250 and 0.7271 and sets up the next chart target of 0.7304.
The Reserve Bank of New Zealand RBNZ kept rates at 0.25 as expected but surprised many by projecting a rate of 0.49 by September 2022, and no less than 1.78 by June 2024.
Some analysts had thought they might hike as early as August next year, but others had seen no move until 2023 or 2024.
The minutes showed the policy committee emphasised this projection was conditional on the economy evolving as expected.
In line with their least regrets framework, members reinforced their preference to maintain the current level of monetary stimulus until they were confident that the inflation and employment objectives would be met, minutes showed.
They agreed this would require considerable time and patience.
Bonds sold off hard on the news, with twoyear yields rising 9 basis points to 0.38. Yields on 10year paper jumped 8 basis points to 1.91, though this cash market is often very illiquid.
Overnight index swaps, which essentially show market thinking on rates, climbed 16 basis points to 0.66 for August, 2022. The implied rate on June 2022 bank bill…