There is historic precedent for the RBNZ to lead the US Fed in raising the official cash rate
We believe the RBNZ will raise rates by at least 200bps over the next two years
We do not see a higher NZD as the ‘release valve’ in this scenario
Rather we see the NZD/USD ‘fair value’ declining from 0.8200-0.8800 currently
A NZD/USD ‘fair-value’ at 0.7700-0.8300 is easy to justify at-end-2014 even as Fed keeps rates at zero
Read the full report: FX Research
BNZ