The risk of an RBNZ rate hike "is real"

We had the Reserve Bank of New Zealand policy announcement earlier

• RBNZ leaves cash rate unchanged at 5.5%, as expected

and a jump for the kiwi$

• RBNZ Policy Meeting: NZD/USD surges

Westpac response (in brief):

• RBNZ ... was more hawkish on future prospects.
• RBNZ’s projections continue to reflect the risk of further increases in the OCR in 2024. An easing cycle looks quite some time off.
• RBNZ’s projections for the OCR were revised 10bp higher to a peak of 5.69% in September 2024, implying around a 75% chance of a further 25bp rate hike.
• The projections imply a gradual easing of policy from the first half of 2025.
• The long-run neutral OCR was adjusted up 25bp to 2.5%.
• ... more tightening may be required to ensure inflation returns promptly to target

Bolding is mine.

NZD/USD update: