Kiwi Dollar Tumbles After RBNZ Unexpectedly Holds Rates
The New Zealand dollar fell more than 1% to around $0.559, its lowest level in two weeks, after the Reserve Bank kept interest rates unchanged at 2.75%. This defied market expectations of a 25-basis-point hike. Still, the committee indicated that further monetary policy tightening could be necessary, depending on the economic outlook. The decision comes amid persistent inflationary pressures, with the central bank having raised the cash rate at its two previous meetings over concerns that inflation remained outside its 1—3% target range. Analysts expect price pressures to intensify again in the fourth quarter, potentially pushing inflation above 4% and keeping it elevated for longer than previously anticipated due to persistently high energy prices.
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The New Zealand dollar fell more than 1% to around $0.559, its lowest level in two weeks, after the Reserve Bank kept interest rates unchanged at 2.75%. This defied market expectations of a 25-basis-point hike. Still, the committee indicated that further monetary policy tightening could be necessary, depending on the economic outlook. The decision comes amid persistent inflationary pressures, with the central bank having raised the cash rate at its two previous meetings over concerns that inflation remained outside its 1—3% target range.
Analysts expect price pressures to intensify again in the fourth quarter, potentially pushing inflation above 4% and keeping it elevated for longer than previously anticipated due to persistently high energy prices.