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NZ dollar slips after RBNZ raises rates but outlook disappoints

NZD/USD fell nearly 1.7% on the day of the Reserve Bank of New Zealand decision, after projections pointed to only one more quarter point hike before year end.

Reported · Written up by our desk · Major Pairs

FXStreet reports the Reserve Bank of New Zealand raised its policy rate on Wednesday, lifting the Official Cash Rate by a quarter point to 2.75% unanimously, marking a second consecutive increase. The New Zealand dollar still weakened sharply after the decision, with NZD/USD moving from around 0.5900 down into the 0.5800 area and ending near 0.5850.

The currency drop was tied to the RBNZ projections rather than the hike itself, as the outlook implied the bank could deliver one further quarter point before year end, followed by no more. In FXStreet’s view, the press conference language suggested a pause could be on the table, leaving the market to reprice the timing and path of tightening.

FXStreet also notes that rate markets had been pricing roughly 95 basis points of additional tightening out to the middle of 2027, a path that was longer than what the central bank published. The repricing happened within about 90 minutes after the decision, and the Kiwi was described as the weakest major currency from the Tokyo open onward.

On the macro backdrop, FXStreet cites New Zealand’s headline rate reaching 4.1% in the second quarter, more than two points above the target midpoint, and attributes the gap to an imported energy shock. The outlet links the wedge to crude oil staying above $90.00 amid developments involving Iran and the Gulf, arguing that tightening into an import-price shock is less credible because the central bank cannot influence the shock directly.

Latest closeWTI crude $90.70 ▲0.5%

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