The New Zealand dollar responded negatively to the RBNZ’s remarks and is now decreasing against the US dollar. The current NZDUSD exchange rate stands at 0.6112.
NZD dropped to a two-week low after the Reserve Bank of New Zealand kept the interest rate unchanged and proposed a less aggressive approach to monetary policy.
The interest rate remained at 5.5% per annum, as before.
In its comments, the CB noted progress in controlling inflation and reduced expectations regarding price pressures.
Investors were concerned by the Central Bank’s view on the likelihood of another rate hike. Such a possibility is not ruled out because the Central Bank believes it should keep rates high for a prolonged period.
Investors’ expectations for a reduction in borrowing costs in May decreased from 50% to 20%.
The sentiment of the Central Bank and that of the capital market did not favour the NZD.