The bank raised its policy rate by 0.25 percentage points to around 0.75%.
Salt Funds managing director Matt Goodson said 2026 would show an interesting “dispersion” among the central banks.
“Australia may well have to hike, possibly as early as February, and quite likely by May, and the Bank of England cut last night,” he said.
He noted the European Central Bank had remained on hold and the US Federal Reserve had cut this month and may well cut again early next year.
The market is pricing in a New Zealand rate hike – perhaps later next year – but Goodson said there was a good chance the Official Cash Rate would remain at 2.25%.
“There are going to be quite different monetary policy directions next year, which could lead to quite different foreign currency movements,” he said.
The BoJ’s move could also influence the Japan “carry trade” where Japanese investors use cheap money to invest, unhedged, offshore – often in property or high-yielding securities.
Then there were the foreign investors who borrowed in Japan at very low rates and invested back in their home markets, also without currency hedges in place.
“That carry trade will be under more and more pressure,” Goodson said. “It’s potentially quite important for investment markets more broadly.”
Locally, index upweightings to the NZX50 added fizz and volume to the market.
Vital Healthcare increased its index weighting after its recent equity raising, and it was a similar story for SkyCity and Precinct.
Vital, which is also due to enter a key FTSE real estate index, ended the day down 3.5c at $1.94 with 18.6 million shares trading.
SkyCity gained 4c to 89c with 7.6 million shares trading, while Precinct dropped a cent to $1.16 with 14.6 million shares going through.
News that the ANZ’s business confidence reading hit its highest level in 30 years over December helped to buoy the market.
ANZ said a net 74% of respondents expected better business conditions, up seven points.
Businesses’ expected “own activity” rose seven points to a net 61%, also its highest level in 30 years.
“Historically, it’s been a pretty good forward indicator for GDP growth six to 12 months down the track,” Goodson said.
“That’s a very encouraging survey for the economy.”
Exchange operator NZX gained 2c to $1.50 after announcing that NZX Wealth Technologies (NZXWT) had done a deal with Craigs to extend the services NZXWT provides Craigs to include Craigs’ custody and private wealth business.
NZXWT has administered Craigs’ clients investing in mySTART, Craigs KiwiSaver and Craigs Superannuation on the platform since 2018.
Among the big names to gain were Fisher and Paykel Healthcare, up 19c to $37.10; Ebos, up 60c to $27.53; and Infratil, up 28c at $10.98.
Among the smaller issues, Eroad rallied by 9c to $1.20.
Trade Window, which listed on the ASX today, dropped 2c to 29c.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.
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