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The decision was made with a 3-3 vote, with Governor Anna Breman casting the tie-breaking vote. A chart released alongside the decision suggests a more aggressive increase in the official overnight cash rate than was anticipated in February. ANZ noted that this chart indicates a very high likelihood of consecutive rate hikes at the next three meetings. “We continue to expect three rate hikes this year, in July, September, and October,” said ANZ New Zealand Chief Economist Sharon Zollner. “We remain open to the official overnight cash rate rising above 3%, but there are still many uncertainties before that point.”

Golden Ten Data, May 27 – According to a report by Morgan Stanley strategists, the rising global bond yields have pushed the stock-bond correlation in developed markets close to historical highs. They stated that, historically, when US Treasury yields break through approximately 4%-5% and European bond yields exceed around 3%-3.5%, higher yields begin to have a negative impact on stock valuations. "Supported by strong earnings growth, risk assets may withstand higher interest rates, but bond volatility remains a medium-term risk." They added that bond volatility is often a greater driver of stock valuations, especially within a six- to twelve-month timeframe.

The interest rate differential between the US and Japan of 3 percentage points continues to suppress the yen; the technical outlook for USD/JPY remains bullish, with ongoing attention on the 160 level.