The New Zealand Central Bank's (RBNZ) policy meeting on Wednesday is expected to see interest rates hike for the third time in a row.
The central bank had previously raised rates by 50 basis points in two previous policy meetings bringing the current interest rate to 0.75% from 0.25%.
Following rising inflationary pressures amid supply chain disruptions and a tense labor market, analysts did not rule out the possibility for a 25 basis point hike to be implemented at the next meeting.
New Zealand's inflation rate has risen to 5.9%, the highest level in 30 years in the fourth quarter of 2021. While the unemployment rate is at its lowest level at 3.2%.
This will certainly trigger a faster tightening action from the central bank to restrain it from rising higher.
Meanwhile, the market is also waiting for the central bank to explain how it will reduce its balance sheet which has increased due to the bond purchase program.
This expectation puts the New Zealand dollar to remain stable against the US dollar despite concerns over the Russian -Ukrainian crisis slightly limiting the risk -sensitive currency.
