18.12.202503:35:43UTC+00New Zealand Dollar Weakens Despite Strong GDP Data

The New Zealand dollar dropped to $0.576, marking its lowest point in almost two weeks, despite data indicating stronger-than-anticipated economic growth. The GDP for the September quarter increased by 1.1%, rebounding from a 1% decline in the previous quarter. This figure surpassed market projections of a 0.9% increase as well as the Reserve Bank's forecast of a 0.4% rise. However, despite this positive growth, the economy still has considerable spare capacity, implying that this resurgence is unlikely to trigger inflation in the forthcoming year. Consequently, the anticipation of an immediate interest rate hike has diminished. Investors now see a 40% likelihood of a rate increase by July next year, a decrease from the roughly 50% probability before the release of the recent data. Furthermore, RBNZ Governor Anna Breman has recently downplayed the chances of rate hikes, suggesting that interest rates are expected to remain stable through 2026. She also highlighted that financial market conditions have tightened more than what the bank had projected.