The RBNZ’s decision to delay raising interest rates highlights how the spread of COVID-19, and governments’ responses to it, has returned as a key driver in financial markets over the past couple of months. Nonetheless, unless the outbreak in New Zealand worsens significantly, we continue to expect the RBNZ to hike rates sooner and faster than most other G10 central banks, leading to higher bond yields and a resilient Kiwi.
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