FX.co ★ New Zealand Dollar Drops After RBNZ Rate Hike

The New Zealand dollar slipped to around $0.585 on Wednesday, its lowest level in nearly three weeks, even as the Reserve Bank of New Zealand (RBNZ) raised interest rates for a second consecutive meeting. The central bank lifted the Official Cash Rate (OCR) by 25 basis points to 2.75%, in line with market expectations, and reiterated the need to withdraw monetary stimulus to contain elevated inflation. Its latest projections also indicate there may be one further quarter-point rate hike before the end of the year. Policymakers first began raising the cash rate in July, signaling a move away from highly accommodative settings after headline inflation climbed above the RBNZ’s 1%–3% target band. Investors are now focused on Governor Anna Breman’s post-meeting comments for additional insight into the future path of interest rates.