22 May 2024
3 mins clock icon

RBNZ keeps rates on hold

By Daniel Richards

The Reserve Bank of New Zealand held its benchmark official cash rate steady at 5.5% at its meeting this morning, as market observers had widely expected. The bank cautioned that restrictive policy was still needed in order to bring inflation back down to target, and that domestic price growth had not been decelerating as quickly as hoped. Annual CPI inflation was 4.0% y/y in April, down sharply from 4.7% in March but still well above the target 1%-3% range. The commentary was hawkish, advising that rate cuts likely won’t begin until the second half of 2025 and the NZD strengthened after the meeting.

The IMF has completed its 2024 Article IV mission to the UK and has raised its growth forecast to 0.7% this year, from 0.5% previously, while holding its 2025 projection pat at 1.5%. The Fund noted that inflation was falling more rapidly than had previously been anticipated and expects that growth will pick up as ‘disinflation buoys real incomes and financial conditions ease.’ However, it cautioned that longer-term growth prospects ‘remain subdued due to weak labor productivity’ and long-term illness raising inactivity levels.

Canada’s CPI inflation fell to 2.7% y/y in April, in line with expectations and down from 2.9% in March. Prices were 0.5% higher than the previous month. Lebanon’s CPI inflation slowed to 59.7% y/y in April, down from 70.4% in March. This marked the slowest pace of annual price growth since mid-2020, as the series of economic and financial crises which hit the country, beginning with a debt default in March of that year, has seen inflation average 167.5% over the past 48 months.

Today’s Economic Data and Events

10:00 UK CPI inflation, % y/y, April. Forecast: 2.1%

18:00 US existing home sales, April. Forecast: 4.22mn

22:00 FOMC meeting minutes, May.

Fixed Income

  • With a lack of major data releases, markets were watching for more commentary from Fed officials, who largely continued with the cautious-to-hawkish town set by colleagues the previous day. Markets will now be watching for the release of the FOMC meeting minutes this evening.
  • Yields on the 2yr UST dropped 0.2bps, the first fall in three sessions, to close at 4.8285%, while the 10yr yield ended down 3bps at 4.4120%.
  • Qatar is pricing a multiple tranche green benchmark issue. A 5yr is being offered around +70 while a 10yr is pricing around the +80 region.


  • The dollar index gained against its peers for the second day in a row yesterday, closing up 0.1%, but there was little in the way of strong movement on the majors for want of any meaningful data releases.
  • EUR closed at 1.0854, down by less than 0.1% against the greenback, while GBP closed up by even less at 1.2709. JPY moved a little more but still by less than 0.1%, closing at 156.17.
  • NZD was the  notable mover as it closed down 0.2% against USD at 0.6092, but it has gained 0.9% following the hawkish central bank meeting this morning.


  • There were new record closes for equity indices in the US as tech stocks enjoyed gains yesterday. The Dow Jones and the NASDAQ both added 0.2%, while the S&P 500 closed up 0.3% for its 24th record close this year.
  • European equities were under pressure by contrast yesterday, erasing some recent gains. The composite STOXX 600 closed down 0.2%, with the CAC notably closing 0.7% lower.
  • Locally, the DFM closed up 0.2% while the ADX dropped 0.3%. In Saudi Arabia, the Tadawul closed all but flat while Egypt’s EGX 30 also closed almost unchanged.


  • Oil prices tumbled yesterday, with Brent futures closing down 1.0% to close at USD 82.9/b and down a further 0.6% this morning. WTI meanwhile fell 0.7% yesterday to USD 79.3/b and is down a further 1.4% so far this morning.
  • Fresh demand concerns are weighing on prices as the US reported that stockpiles swelled last week. According to the API report, crude inventories rose by 2.5mn bbl.

Written By

Daniel Richards Senior Economist

There was an error during your feedback!

Your feedback is valuable to us and will help us improve.

Daniel Richards

Related Articles

Subscribe to our newsletter and stay updated on the markets

There was an error during your newsletter subscription!

Please try again to stay updated with all the latest financial news and valuable insights.

Thank you for newsletter subscription!

To stay updated with all the latest financial news and valuable insights.