New Zealand Dollar Falls Sharply as RBNZ Signals Rate Hike Pause

By DailyFx | Updated July 30, 2014 AAA

DailyFX.com -

Talking Points:

  • Reserve Bank of New Zealand Hikes Official Cash Rate by 25 bps to 3.5% as Expected
  • 10-year NZ Bond YieldFell to 4.177%, Their Lowest Levels Since May 2013
  • The New Zealand Dollar Falls Sharply as RBNZ Signals Pause in Future Rate Hikes

The New Zealand Dollar fell sharply today as the Reserve Bank of New Zealand delivered its monetary policy announcement. The central bank hiked the official cash rate by 25 basis points to 3.5 percent from a prior rate of 3.25 percent, meeting market expectations. The Bank said that it expected today’s rate hike to keep average annual inflation around 2 percent.

The New Zealand Dollar likely fell because the policy statement accompanying the rate decision undermined the case for continued tightening. The Bank’s governor, Graeme Wheeler, said it is “prudent that there now be a period of assessment before interest rates adjust further.” The Kiwi fell alongside a parallel decline in New Zealand’s bond yields, a reflection of monetary policy expectations. The rate on the benchmark 10-year note fell to its lowest level since May 2013.

New Zealand Dollar Falls Sharply as RBNZ Signals Rate Hike Pause

NZDUSD [15 mins – 07/23/2014]. Created using FXCM Marketscope.

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